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Microsoft’s Phones Not Good Enough: Rich Jaroslovsky

Ever seen a Microsoft Zune HD? It’s a lovely little device for watching movies, listening to music and playing games. Slim, sleek, sophisticated -- and irrelevant.

That’s because the Zune HD was released two years after the debut of Apple Inc.’s iPod Touch. By the time it joined the battle, the war was already lost.

In technology, being late can be as disastrous as being wrong. And that’s the battle Microsoft Corp. is now fighting with the release of Windows Phone 7, its new smartphone operating system. The good news is that the software is generally a winner: fun, easy to use and not just another iPhone wannabe. The bad news is that the good news may not matter.

Microsoft hasn’t just lost market share since the iPhone inaugurated the modern smartphone era, it has seen its position implode, falling to 5 percent in the second quarter from 22 percent in 2004.

The company simply can’t afford to be shut out of the booming market. Morgan Stanley analyst Mary Meeker predicts that within five years, more users will connect to the Internet on mobile devices than the desktop computers that Microsoft has dominated for decades. Unless the company can establish a beachhead in mobile, it’s facing a long slow slide into irrelevance.

Photographer: Jin Lee/Bloomberg

A model holds the HTC Surround smartphone during an event for the unveiling of Windows Phone 7 in New York. Close

A model holds the HTC Surround smartphone during an event for the unveiling of Windows... Read More

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Photographer: Jin Lee/Bloomberg

A model holds the HTC Surround smartphone during an event for the unveiling of Windows Phone 7 in New York.

Android Threat

As devastating as the iPhone’s arrival proved, Microsoft’s true mortal threat comes from Google Inc.’s Android software, which in little more than a year has skyrocketed. Google says it is now activating more than 200,000 new Android devices a day. While Google gives its software to manufacturers, Microsoft charges for its.

To make Windows Phone 7 a success, Microsoft also is spending massively on marketing and offering its business partners other inducements that Google doesn’t. Phones equipped with the new operating system go on sale early next month.

Chief Executive Officer Steve Ballmer’s previous attempts to stem the Android-iPhone tide resulted in embarrassment upon embarrassment, including a roundly panned update of Microsoft’s previous mobile operating system in 2009 and, earlier this year, the dismal failure of its Kin line, two phones built around social networking that were killed off less than two months after they were introduced.

In other words, the stakes could hardly be higher. And because of that, Microsoft -- which is exerting a great deal of control over manufacturers in terms of the look and feel of the new Windows Phone 7 handsets -- deserves a lot of credit for being willing to do a few things that go against the prevailing smartphone norm.

Live Tiles

The difference is apparent from the moment you power up a Windows Phone. Instead of screen after screen of application icons, as with the iPhone and Android phones, you’re presented with a set of colorful rectangles Microsoft calls “live tiles.” Some of these provide information and summon basic functions, such as the phone tile that tells you how many calls you’ve missed and brings up the dial pad; some are links to programs, such as a mobile version of Microsoft’s Internet Explorer Browser; and some are entry points for what Windows Phone 7 calls “hubs.”

To the extent that Windows Phone 7 has a Big Idea, hubs is it. These are collections of programs, information and functions organized around a single theme. There are six of them: People, Pictures, Music and Video, Marketplace, Microsoft Office and Games.

Accessing Music, Photos

The People hub, for instance, agglomerates your address book, Facebook friend list and updates in one place. Music and Videos is based on the Zune software, which is easy to use and syncs with content on your computer. Games brings the Xbox Live service to mobile phones, allowing you to play against other users, though I personally prefer not to share with others evidence of my startling lack of ability. The Pictures hub is both a home for your own photos and videos and a portal for viewing and commenting on others’ Facebook photos.

The idea sounds more complicated than it is. I found the hubs generally logical and easy to grasp; their major shortcoming is that they are too limited.

Facebook, for example, is well integrated into the People hub -- but Twitter isn’t. For that, you have to leave the tile view to scroll through a tiresome vertical list of apps.

The Pictures hub is great if you and your friends all use Facebook or Microsoft’s Windows Live to store photos online. Use Yahoo’s Flickr or some other service? Not so lucky.

Microsoft has a good idea here, but it has to do much more to make its phones friendlier to the things I want to use on it, not what it and its partners want me to use.

Business Considerations

That, in fact, is my biggest complaint about Windows Phone 7: Too much about it seems dictated by business considerations rather than user experience. For instance, the two AT&T Inc. phones I tested -- the HTC Surround and the Samsung Focus --both included a fat first-screen tile touting AT&T’s U-verse television service.

Office, which includes limited-function productivity software, seems to be a hub because, well, Microsoft owns Microsoft Office.

The Surround and HTC’s HD7, which is appearing in the U.S. on the T-mobile network, both have tiles leading to an “HTC Hub” that, confusingly, includes its own interface and featured apps.

Playing Catch Up

Because Windows Phone 7 is, essentially, an entirely new smartphone platform, it will take a while before we have any sense of whether and how quickly third-party developers write apps for it. (The new Marketplace hub is still in the process of being populated.) Certainly Microsoft, with its deep pockets, will do all it can to provide inducements, but it’s safe to say that it will lag far behind the iPhone, Android devices and even Research In Motion Ltd.’s BlackBerry for a long time to come.

Similarly, Microsoft has a lot of catching up to do in terms of basic functionality. Among other things, Windows Phone 7 doesn’t yet offer a visual listing of voicemail messages, as Android phones and iPhones do, nor is it equipped to share its Internet connection with other devices.

Facing a field crowded with well-entrenched competitors, Microsoft smartly decided it stood little chance with a me-too entry. Its gamble to do things differently resulted in a product that, all things being equal, provides a plausible alternative. But at this late date, all things aren’t equal, and Windows Phone 7, while much better than previous Microsoft offerings, doesn’t do any one thing so much better that it makes you have to have it.

(Rich Jaroslovsky is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Rich Jaroslovsky in San Francisco at rjaroslovsky@bloomberg.net.

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net.

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