Verizon Wireless Won't Sell Microsoft Windows Phone 7 at Start

Verizon Wireless, the largest U.S. mobile-phone carrier, won’t sell handsets with Microsoft Corp.’s Windows Phone 7 operating system when it debuts this year, a blow to the software maker’s efforts to reach a broad market.

Verizon Wireless won’t offer a device at the planned fall introduction or at any point this year, Brenda Raney, a Verizon spokeswoman, said today in an interview. The carrier plans to support the new operating system and will probably release a phone in 2011, she said.

Microsoft overhauled its mobile-phone operating system to stem market-share losses to Apple Inc.’s iPhone and phones with Google Inc.’s Android software. Although support from carriers early on helps attract consumers, the success of the iPhone shows that a product can be popular without Verizon, said Michael Gartenberg, an analyst with San Mateo, California-based technology research firm Altimeter Group.

“The more carriers and the more devices they can bring early on, the more chance they have for mainstream success, but not having Verizon will not make or break it,” Gartenberg said. “Look at the iPhone -- you don’t need Verizon to be successful in the U.S. in mobile. On the other hand, it would be good for Microsoft to count Verizon in as a named partner early on.”

Microsoft and Verizon’s most recent mobile collaboration on Microsoft’s Kin phone ended when the software maker pulled the phone after two months due to disappointing sales.

Relationship ‘Solid’

“Our relationship with Microsoft is solid,” Raney said.

Microsoft declined to say which carriers would bring out the phones and when.

“Together with our hardware and mobile operator partners, we look forward to bringing Window Phone 7 to market this holiday,” Greg Sullivan, a senior product manager at Microsoft, said in a statement. “Verizon continues to be a key Windows Phone partner going forward.”

Microsoft rose 22 cents to $25.33 at 4 p.m. New York time on the Nasdaq Stock Market. Verizon Wireless parent Verizon Communications Inc., based in New York, gained 23 cents to $31.42 on the New York Stock Exchange.

Verizon’s introduction of several phones running on Android helped the carrier beat analysts’ estimates last quarter and forecast rising profit for the rest of the year.

In June, Microsoft stopped work on the Kin social- networking phone. The phone had been on sale for less than two months and a price cut by Verizon failed to produce enough sales to keep the product on the market.

U.S. Carriers

Microsoft said in February that U.S. carriers such as AT&T Inc., Verizon, T-Mobile USA and Sprint Nextel Corp. would support the new phones. The company didn’t specify when.

Mark Siegel, a spokesman for Dallas-based AT&T, and Cristi Allen, a spokeswoman for Overland Park, Kansas-based Sprint, both said the companies plan to sell phones with the new operating system and also declined to say when.

Microsoft’s share in the global mobile-phone market fell to 5 percent in the second quarter, from 9.3 percent a year earlier, according to market research firm Gartner Inc. Android climbed to 17 percent from 1.8 percent, while the iPhone rose to 14 percent from 13 percent.

With spending on smartphones and other devices replacing some personal computer purchases, a market Microsoft dominates, the company needs to do better in phones, according to Al Hilwa, an analyst at market research firm IDC.

“It’s crucial for them to be relevant in this space,” Hilwa said. “If you look at people spending more on devices, 5 to 10 years from now Microsoft could be king of completely the wrong hill. They get that.”

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.netdbass2@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net

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