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Microsoft Sees Windows Gaining Smartphone Share

Microsoft (NASDAQ: MSFT) expects license sales of its Windows Mobile operating system to outpace the overall growth in advanced mobile phones known as smartphones over the next few years, a top company executive said on Monday.

Microsoft entertainment and devices division president Robbie Bach said he expects phones running Windows Mobile to gain market share as the overall smartphone market nearly quadruples in size over the next three to four years to around 400 million handsets.

"I certainly think you should expect us to continue to gain share," said Bach in an interview with Reuters. "The market is starting to take off within the category that we really play in. In this case, we have a clear opportunity to grow share."

Microsoft, the world's largest software maker, has predicted its Windows Mobile license sales will reach 20 million in its fiscal year ending in June, nearly doubling its sales from a year earlier. It hasn't issued a forecast for the next fiscal year.

The market for smartphones, mobile phones with computerlike features such as e-mail and Web browsing, is growing crowded. Apple (NASDAQ: AAPL) has rolled out its iPhone, and Research In Motion's (NASDAQ: RIMM) BlackBerry device maintains a loyal following among business users.

Meanwhile, Britain's Symbian operating system leads the market with almost two-thirds market share due in part to extensive use of its software by mobile phone leader Nokia (NYSE: NOK) and Linux could get from a boost from Google's (NASDAQ: GOOG) open-source mobile phone platform called Android.

Still, Microsoft has made progress getting Windows Mobile on more phones and on more operators. The latest to sign up with Windows Mobile was Sony Ericsson, joining Motorola (NYSE: MOT) and Palm (NASDAQ: PALM) as offering devices with the Microsoft operating system.

Instead of offering both the hardware and software such as RIM's BlackBerry or Apple's iPhone, Microsoft sees a better opportunity by offering the software platform for other handset makers to run.

It is a business model that was successful for Microsoft on the PC where Microsoft worked with many hardware manufacturers, but less so on portable media devices such as Apple's iPod.

"[Gaining market share] is going to happen, in our view, as a platform play. The way for us to be successful in that is to get big numbers and a bigger percentage of that pie," Bach said.

Analysts estimate that Microsoft generates license revenue of $8 to $15 per handset, depending on configuration.