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Windows Mobile Poised for Global Revival: Study

Microsoft's Windows Mobile platform is poised for a revival -- and a huge one, according to a report issued today.

Despite the heavy competition from new entries, namely Palm's (NASDAQ: PALM) webOS and Google's (NASDAQ: GOOG) Android, the use of Windows Mobile in smartphones is slated to triple from 2009 to 2013, allowing it to claim the No. 2 spot in the global market, according to research firm iSuppli.

By 2013, almost 68 million smartphones will run Windows Mobile, up from 27.7 million this year. On the global stage, that mark would give Microsoft's (NASDAQ: MSFT) mobile operating system the No. 2 ranking with a market share of 15.3 percent, trailing only Nokia's (NYSE: NOK) Symbian, which will command 47.6 percent of the OS market, according to iSuppli's projection.

Although Windows Mobile is expected to fall to third place in the smartphone OS market for 2009, the swell in usage will allow it to retake the second-place position it held in 2008 by 2012.

"Windows Mobile is facing a host of challenges, including rising competition from free alternatives like Symbian and Android, the loss of some key licensees and some shortcomings in its user interface," iSuppli analyst Tina Teng said in a statement. "However, Windows Mobile holds some major cards that will allow it to remain a competitive player in the market."

Teng argued that the Microsoft infrastructure and ecosystem will propel its mobile OS to future gains.

"The battle over smartphone software has spread beyond the operating systems," she said. "To win in today's environment, a company needs not only an operating system but also device support, an application store, a broad portfolio of applications and support from the developer community. While Windows Mobile is losing some share to competitors in 2009, most of the alternatives cannot match Microsoft's complete suite of offerings."

Microsoft, for instance, offers a complete set of services that can assist clients in their customization and software integration efforts, rather than simply offering a barebones operating system, Teng noted. In contrast, OEMs wanting to customize the Symbian and Android operating systems by modifying the user interface or widgets must invest in add-on software.

The news of Windows Mobile reclaiming ground comes as Microsoft prepares a global roll-out on Tuesday of branded smartphones running version 6.5 of the OS. Verizon already unveiled details of its first Windows Mobile 6.5 handset, boasting an impressive feature set for the HTC Imagio, priced at $199 and scheduled to debut online Oct. 6, and in stores Oct. 20.

Meanwhile, Motorola this fall is also mounting a comeback in the mobile sector by releasing a family of Android handsets. The Cliq is due to go on sale to existing T-Mobile customers Oct. 19. Another Motorola handset, dubbed Tao, is widely expected to be Verizon's first Android smartphone, and may be released as early as next week.

Also, Palm is ramping up its webOS with new upgrades and a second device, the Pixi, designed as the smaller sibling of the Pre.

Teng, however, says Microsoft's recent loss of those two licensees -- Palm and Motorola -- may not be as significant as they might appear.

"Palm never used Microsoft for all of its smartphone operating system needs, so it never represented a large amount of business for the company," she said. "Furthermore, it was known that Palm was working on its own smartphone operating system for the Pre. As for Motorola, the company's shipments and market share in the mobile handset business have been declining in recent years, making it a less significant player."

Meanwhile, Windows Mobile recently gained another key licensee: LG, the world's No. 3 mobile phone OEM, according to iSuppli. LG has pledged to produce 50 Windows Mobile handset models. Even after the loss of Palm and Motorola, Windows Mobile still boasts the largest number of OEM licensees among all smartphone operating systems, at 14. Symbian is in second place, at 10, according to Teng's data.

Still, she noted that Microsoft is far from flawless on the mobile OS front.

"The Windows Mobile user interface looks poor compared to some of its slicker competitors -- particularly Google's Android and Apple's iPhone operating system," Teng said. "The rigid folder system structure of Windows Mobile can be challenging for users."

In addition, she faulted Microsoft for failing to update the user interface of Windows Mobile quickly enough and cited the lack of support for capacitive touch-screen technology as a major drawback. "This represents a major barrier for smart-phone OEMs that would like to produce innovative phones," Teng said.

Despite the missteps, Microsoft is expected to provide a remedy shortly the form of an update, she said.

"Microsoft in 2010 will introduce an updated version of its operating system, Windows Mobile 7, which is expected to sport an enhanced user interface and browser as well as multitouch control," Teng predicted. "This will make it much more competitive with the alternatives on the market."