Win Mobile sales miss target, iPhone may play role

Microsoft has missed its much-vaunted yearly goal of selling 20 million licenses for Windows Mobile by a wide margin, the company has revealed. Initially certain that any shortfall would amount to a "rounding error," the company now acknowledges that it has only sold 18 million licenses over the course of its last fiscal year, which ended in June. Microsoft hasn't provided reasoning for the gap, which was unexpected as recently as a month ago.

This may have stemmed in part from iPhone 3G anticipation, according to In-Stat analyst Bill Hughes. The Apple device in question was unavailable until July but may have contributed at least partially to Microsoft's sub-par results by encouraging many prospective customers to wait for the release of the updated iPhone rather than commit to a Windows Mobile device. Microsoft is known to have long struggled with making Windows Mobile relevant to home users rather than just workers and has suffered a minor blow with the iPhone 2.0 firmware, which adds Microsoft Exchange support that may allow some workers to use an iPhone for business purposes in place of a Windows Mobile device.

The deficit of two million phones may also have been supported by existing low-cost alternatives and delays in high-end models. Kevin Burden of ABI Research points to both Palm and Research in Motion successfully boosting sales through a strong emphasis on the home. While Palm has long struggled to appeal to users outside of a small business contingent, the company's recent Centro phone has been very popular at an average $99 contract price and has sold two million units since fall 2007. Sony Ericsson may also have pushed back its first Windows Mobile phone, the XPERIA X1, far enough back in the second half of the year for Microsoft to have held back on shipping the software, according to The 451 Group's Chris Hazelton.

Other Windows Mobile phones announced in the first half of 2008, such as the HTC Touch Diamond, were often released only in the last few weeks of Microsoft's fiscal year and only to certain markets, reducing any positive impact they may have had on final results.

Regardless of specific reasons, the chance also exists that Microsoft incorrectly assumed that a renewed emphasis on smartphones for average users would have an effect, Burden notes. Version 7, the first edition known to be more explicitly targeted at home users, isn't due until later in 2009.

Filed under: iPhone, industry, mobile phones
Other story tags: Microsoft, Windows Mobile, iPhone 3G, htc, Palm, Sony Ericsson, Centro, XPERIA