Windows Mobile 6.5: Microsoft’s Cunning Plan?

A new release of Microsoft’s Windows Mobile, due on 6 October, will get more attention than most other mobile operating system launches updates. But as far as Microsoft is concerned, it’s for all the wrong reasons.

To put it as bluntly as Microsoft CEO Steve Ballmer allegedly did, during Microsoft’s venture c apital summit on 24 Sept. Microsoft has “screwed up” Windows Mobile, according to investors at the meeting.

Now, to keep in the game, it looks like the company is in a position where it has to hype up a 6.5 release that would normally be an interim step, and rely on a hastily put-together base of downloadable apps to compete against the iPhone.

Any observer would have to say this does not look good for the company’s mobile aspirations.

Declining market share

Microsoft has never had a strong position in smartphones, and its share is of the mobile operating-system market is actually declining, sluming to nine percent in the second quarter of 2009, according to a research note by Gartner.

And things aren’t getting better: Strong competition from established players such as Apple, Nokia, Palm and Research In Motion threatens to drive that down even further.

“The four leading companies in smartphones, Apple, RIM, Palm and Nokia, have all basically developed their own operating system,” said Steve Brazierzier of Canalys, who is running a Mobility Forum in London in November. “I would conclude that it is not all that difficult to build an operating system – particularly as Palm has done so very well, on very limited resources.”

Brazier thinks that the mobile space is too important for Microsoft to give up, no matter how badly it is currently failing. And so Microsoft has spent the summer trying to create a steady drumbeat for the release of Mobile 6.5, in the process raising the stakes for its success.

Can Windows Mobile survive till Version 7?

If Microsoft’s mobile market share upticks a few points over the next few months, that will create some breathing room for the company in advance of its next rollout, Mobile 7. Microsoft is keeping this under wraps, but it’s got to provide more robust competition to the iPhone and the Palm Pre.

If Windows Mobile’s market share continues to decline, though, Microsoft could be faced with some harder strategy questions.

During the venture capital summit, Ballmer reportedly said that he wished Mobile 7 had already been launched. That update is scheduled to launch in the fourth quarter of 2010.