Microsoft's biggest 'Mango' challenge: Creating excitement without killing demand

Microsoft CEO Steve Ballmer is beating the Windows Phone "Mango" drum a day ahead of tomorrow's VIP Preview event, promising the next Windows Phones will sport more than 500 new features.

While it's true generating phone demand is tied to a combination of lots of new features plus lots of new apps, my readers seem to have a somewhat different set of priorities. I've been getting lots of questions over the past couple of weeks about 1) what kinds of enterprise-focused features Microsoft plans to bring to Mango phones and 2) what Microsoft is going to do to stoke the market for new phones running the next version of its mobile OS, without completely killing off demand for existing WP7 phones.

Both of these are good questions, and I'm wondering if the May 24 Windows Phone event will provide answers on either front (given the rumors that the VIP Preview event is going to be 99 percent about the consumer features coming to Windows Phone OS 7.5, a k a Mango).

Just today, I received this note from a reader in my inbox (with company/product names eliminated to preserve the reader's privacy):

"I'm sure other businesses are in the same situation as I'm in today. (My company) has a mobile ordering application developed in VB.net in Visual Studio 2005. It is currently running in WM (Windows Mobile) 6.5. Is there any possibility of running this in WP7?"

The answer, as we learned last year from Microsoft, is that there's no backwards compatibility between WM 6.5 and WP7. Some customers with custom line-of-business applications are redoing their apps for WP7. But without encryption, VPN support and private-application loading, a number of business users are not willing and able to move to WP7 and are stuck on the dead-end WM 6.x if they want a Microsoft-provided phone platform. (As Gartner Group noted last week, WM 6.x phones were still outselling WP7 phones worldwide in the first quarter of 2011 -- an estimate Microsoft is neither confirming nor denying.)

Microsoft officials did unveil last week at the TechEd 2011 conference a handful of business-focused features that are slated to be part of the Mango phone update, which is expected to be available on new and existing phones later this year. Among those features are alphanumeric password protection, support for hidden WiFi networks, and better SkyDrive support for Office Web Apps. Microsoft is expected to add private and beta marketplace support for Mango phones, but some of my readers said the few details the Softies have shared about the private marketplace are leaving them wondering whether their organizations will be satisfied with it.

Meanwhile, more than a few of my colleagues have wondered aloud what will happen to the already not-so-strong demand for Windows Phones if Microsoft and its partners don't have some kind of upgrade plans/assurances in place once the full set of Mango features is made public. I know I'm not the only Verizon customer who has been waiting (and waiting and waiting) for Verizon to unveil its first Windows Phone -- something that Verizon last week said would be happening on May 26 -- but who know is rethinking whether I should wait to see what's coming preloaded with Mango later this year.

Why buy an adequate but unexciting WP7 handset when I might be able to pick up a more-up-to-date one running Mango in five or six months? Phones aren't like PCs, which are on a longer development cycle. There's no smartphone "Upgrade Guarantee" program like the one that Microsoft and its partners offer with Windows and Office -- allowing users who buy older versions of Windows PCs or Office preloaded on their PCs to get upgrade coupons good for a new version of the software if they do so a few months before new versions of the operating system and apps are released. Yes, you will be able to download Mango for your existing Windows Phone. But your existing Windows Phone won't include a front-facing camera or a gyroscope or a built-in NFC chip....

While it's true that other smartphone vendors are in the same boat as Microsoft, when it comes to the risk of pre-announcing new features too early, Apple and the Android phone makers have more of a headstart and more momentum than Microsoft does in this space. Apple's user base defies the laws of gravity (and justifiable demand patterns) and will buy new versions of products just because they're out. And there are so many different Android phones on the market from different vendors (compared with Microsoft's handful of Windows Phone partners) that the announcement/delivery cycle seems to be a constantly rolling one that is unlikely to be stymied by the unveiling of a new Android

What do you think Microsoft can and should do at this point to generate excitement about Mango phones without causing demand for WP7 devices to completely fall off a cliff? And guesses as to what the Softies will do tomorrow at the VIP Preview (besides show off some of the promised 500 features that we haven't seen leaked yet)?

I'll be at the Windows Phone VIP preview in New York City tomorrow covering the festivities and reporting on what is and isn't unveiled. Stay tuned....