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Microsoft Exec: Windows Phone Must Be a 'Great Consumer Phone First'

Windows Phone's biggest challenge is insufficient consumer awareness, a Microsoft executive said at Mobile World Congress, which took place this week in Barcelona.

Speaking on Wednesday at a presentation to financial analysts that was webcast, Terry Myerson, corporate vice president of the Windows Phone Division, described in broad strokes Microsoft's vision for Windows Phone and its plans for ramping up consumer interest in the brand.

"We just need all sorts of ads to ensure [end users] find out about [Windows Phone]," Myerson said in response to a question from Todd McCommon, talk moderator and a director of investor relations at Microsoft. McCommon asked Myerson to comment on the Windows Phones that have been released in the past few months, particularly those from Nokia.

"In many ways, I think that our biggest challenges right now are not with regard to building a product. I think the reviews are all great. The customer satisfaction scores are great," Myerson continued. "Our challenges are really about building consumer awareness."

Windows Phone's persistently low market share could certainly benefit from more consumer awareness. Windows Phone finished 2011 with a worldwide market share of less than 2 percent, according to the latest estimates from research firm Gartner, putting it far behind perennial market leaders Android and iPhone.

However, some measurements suggest that Windows Phone adoption is currently experiencing an uptick due in part to the success of Nokia's Windows Phone devices, particularly in Europe. According to The New York Times, citing a report by research firm Kantar WorldPanel, "in London, sales of Nokia's Lumia 800 drove Windows Phone 7's market share up to 2.2 percent, from 0.4 percent a year ago."

Microsoft is also gearing up to expand Windows Phone's potential global user base by targeting low-end smartphone buyers and developing markets. Earlier this week at MWC, Nokia and China-based ZTE each debuted inexpensive Windows Phone devices designed for emerging markets: the Nokia Lumia 610 and the ZTE Orbit. Their timing coincides with Microsoft's announcement that it plans to open Windows Phone Marketplace to nearly 30 new countries and reduce Windows Phone's hardware requirements to accommodate low-end devices.

Myerson called the direction of Microsoft's marketing efforts for Windows Phone a "big change."

"Our emphasis on the phone space will be on consumer marketing," he said. "I think we need to rebuild the Windows Phone brand with consumers and drive demand up there. And if people are walking in the stores and asking for Windows Phones, I think a lot of things take care of themselves backstream."

As part of its effort to boost consumer interest, Microsoft recently launched an online video series called "Smoked by Windows Phone," in which Microsoft challenges users of other smartphone platforms to a race with Windows Phone to see which device completes a task faster. Microsoft's goal in the next year and a half is to significantly grow Windows Phone's market share, and the company plans to spend more on marketing to accomplish that, said Aaron Woodman, director of Microsoft's Mobile Communications business, in an interview with Bloomberg published Wednesday.

"We'll do TV spots, the question is where," Woodman told Bloomberg. "Microsoft is patient and willing to use deep pockets, but we're also respectful of shareholder value so we want to pick appropriate countries and spend levels."

Despite the focus on consumer users, Microsoft will continue to make improvements to Windows Phone that will appeal to enterprises, according to Myerson. Windows Phone already has several business-friendly features, including Exchange Server support, mobile Office apps and synching with Office 365. Additionally, Microsoft announced this week that it will add e-mail encryption capabilities to Windows Phone through a partnership with Good Technology. The partnership was designed to provide e-mail security to businesses whose employees use their own mobile devices for work purposes -- the so-called "bring your own device" environment.

"There are certain things that the enterprise requires. That would be security, manageability, connectivity, and all those things are important. We recognize them," Myerson said. "It's reasonable to anticipate we will have a product that has world-class technologies in all those areas."

However, he emphasized that Windows Phone's success depends a great deal on whether it appeals to consumers. "When we did [Windows Phone], we simply recognized that to be a great enterprise phone, we need to be a great consumer phone first," he said.

Next Page: On Nokia and "Windows Phone 8"

On Nokia, 'Windows Phone 8'
Myerson's presentation also addressed other topics, including Microsoft's relationship with its mobile hardware partners. Just over a year ago, Microsoft and Nokia inked a deal in which Nokia would forgo the Symbian smartphone OS in favor of Windows Phone on its devices. The first two Windows Phones from Nokia were unveiled last October, with more appearing earlier this year. Nokia, Myerson said, is Microsoft's "most committed OEM."

"Essentially, we can do work on the demand side with consumers, but we need to do work on the supply side, and having a partner who is very clearly working to make that market is critical. And so we're doing everything we can to support [Nokia]," he said.

He also discussed the issue of differentiation among the various Windows Phone devices currently in the market. McCommon said the Windows Phones on display at MWC looked very similar. Myerson responded that Windows Phone OEMs are working on better defining what differentiates them from each other.

"I see great things in the Nokia booth with very focused differentiation. I see great things in the HTC booth that have focused differentiation. I see great things with other OEMs, as well," he said. "At some level they're starting to look the same, but at another level I'm seeing each of them find the tips of their spear. And that's good for us because we can then make sure that the tip shows through on our platform."

Following the talk with McCommon, Myerson fielded audience questions, some of which were about the next major release of Windows Phone. Microsoft has not officially revealed the name of that release, though reports suggest that the Windows Phone "Apollo" update expected in fourth quarter of 2012 is the code name for Windows Phone 8.

Myerson used the Windows Phone 8 terminology in a response to a question about backward compatibility. He said Microsoft's goal is that "all Windows Phone 7 applications will run on Windows Phone 8." He also said future versions of Windows Phone will include new versions of Internet Explorer.

He also took a jab at the upgrade process for Android and iPhone devices: "Statistically speaking, no Android phones get updated. None. Ever. They have big bugs. They don't even get patched. That's what we're seeing statistically out there.

"In the case of Apple, they've shipped OS updates to hardware that makes it unusable. It's a great hardware sales tool, as far as I can tell -- install this OS which makes your hardware unusably slow, so then you feel compelled to go back to the store and buy a new piece of hardware."

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