Microsoft Positioned for Smart-Phone Growth

Smart phones-phone-computer hybrids capable of running both built-in and add-on software-still have only a small share of the cell phone market. However, growth is accelerating, and devices running Microsoft’s Windows Mobile OS are poised to gain on those of segment leaders Nokia and Research In Motion (RIM). A recent announcement by Palm that it will ship Windows Mobile phones should give Microsoft a major boost. Yet, current growth is being driven primarily by corporate users’ desire for wireless e-mail access, so growth will taper quickly unless Microsoft and other vendors can lure the much larger consumer market.

(Ed. Note: In this article, the uncapitalized term “smart phone” refers to the generic category of devices, while the capitalized term “Smartphone” refers to devices running Microsoft’s Windows Mobile Smartphone Edition software.)

Microsoft’s Strategy

No one really knows yet how big the market for smart phones will grow, and many detractors believe that smart phones will remain niche products aimed at corporate executives and information workers. (See the sidebar “Will Demand for Smart Phones Boom or Bust?“.) However, the segment is currently exhibiting strong growth, and Microsoft and partners remain undaunted and are forging ahead with a strategy to both grow the overall market and increase the market share of phones running either of the two Windows Mobile platforms-the larger touch-screen-enabled Pocket PC Phone Edition devices and the smaller Smartphone devices designed for compactness and one-handed operation.