Why Windows Phone 7 could be the OS/2 of this generation

Photo credit: Nokia

As I wrote in January and as others like Larry Dignan have also noted, both Nokia and Microsoft have a whole lot riding on the success or failure of the Nokia Lumia 900. It's the first Windows Phone 7 device that has the teeth to compete with iPhone and Android, but the Lumia 900 isn't off to a great start and the uphill climb for Microsoft and Nokia is getting steeper. Unless something changes, Windows Phone 7 is in danger of becoming an operating system known for its quality in the technology industry but never widely-adopted by the masses. Does this sound familiar?

The Lumia 900 is good, as I said in my review. It's good enough to replace an iPhone or an Android device for most things. But, it's not significantly better at enough things to drive lots of conversions from iPhone or Android or to get a lot of new smartphone users to pick Windows Phone 7 over the Apple or Google platforms.

If that challenge wasn't daunting enough, a string of bad press and self-inflicted missteps have meant that more obstacles are continuing to stack up against Microsoft and Nokia (and AT&T, the U.S. carrier of the Lumia 900). Here is the litany of problems:

• Launch date - We'd been hearing for months that Microsoft, Nokia, and AT&T were planning a huge promotional campaign to bring the Lumia 900 to market. AT&T said the Lumia 900 would get "one of its biggest launches ever." It was going to be Nokia's big re-entry into the U.S. smartphone market. The launch was set for Sunday, April 8. Nokia even hosted a huge launch party in Times Square in New York City on the Friday night before the big launch. Only one problem: they scheduled the launch on a U.S. holiday. Veteran Windows commentator Paul Thurrott posted on Twitter: "Nokia launches Lumia 900 today in US ... On a day when NO retail stores are open (Easter). I give up."
• Technical difficulties - The Lumia 900 launched with a wireless flaw that Nokia had to fix and then offer a $100 credit to buyers as a make-good. As CNET reported, "Some early Lumia 900 customers found that their phones failed to get a data connection, an issue Nokia confirmed and said it is fixing. As a peace offering, the company is offering this promotion both to appease existing customers and entice potential new ones, with the $100 fully covering the $99.99 handset."
• Retail apathy - While TechRepublic's Bill Detwiler was recently at a retail location asking about the Lumia 900 and the HTC Titan II (another WP7 device that launched on April 8), he pulled out his iPhone 4S to get some information. The salesperson gave him a very confused look and asked, "You're switching from an iPhone to a Windows Phone?" Even worse, I've heard stories from several people who went to retail locations to buy a new smartphone and when they inquired about Windows Phone, the sales associated steered them in another direction. Nokia and Microsoft have reportedly given away 10,000 Lumia 900 devices to AT&T retail store employees in the U.S. to help win them over to the platform.
• European disdain - In Europe, where the Lumia 800 (the little brother of the 900) has been on sale since December, representatives of four major wireless carriers said that Nokia Lumia phones weren't good enough to compete against Apple's iPhones or Samsung's Android phones, according to a Reuters report. One telecom executive told Reuters, "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell." That's a bitter pill considering Nokia was the runaway marketshare leader for smartphones in Europe just a few years ago.

Fortunately, there have also been a few encouraging signs:

• Nokia said that it has sold so many Lumia 900 phones that it's having a hard time keeping up with the inventory demands (although the company has refused to disclose sales numbers).
• On opening weekend, the Lumia 900 became the top-selling cellphone on Amazon.com.
• A poll on WPcentral.com found that most of the customers who were buying the Lumia 900 were coming from iPhone (29%) or Android (28%).

Still, the company that Microsoft picked to be its No. 1 hardware partner for Windows Phone 7 is struggling badly. On April 11, Nokia announced the latest in a string of disappointing earnings reports and told financial analysts that things are going to get worse in the immediate future as Nokia phones lose traction against Android devices in emerging markets.

It's not like either Microsoft or Nokia are going to get out of the smartphone business if the Lumia 900 isn't a big hit. But, as I said in January when the Lumia 900 was announced, if this device isn't a hit then Microsoft and Nokia will become an increasingly isolated duo. Without a sign that WP7 is finally gaining momentum, it's doubtful that HTC, Samsung, LG, Dell, or any other hardware manufacturers will jump on the Windows Phone 7 bandwagon.

That will leave Nokia and Microsoft to struggle along for another year or two with low single-digit marketshare in smartphones and little hope of making a significant impact on the mobile market. While that might be a shame -- as I've said many times, Windows Phone 7 is one of the best pieces of software Microsoft has built -- it would not be unprecedented. It reminds me of the situation with OS/2 in the late 1980s and early 1990s. OS/2 was a joint project between IBM and Microsoft to build a next-generation operating system for PCs. Although most technologists judged it a superior piece of software, OS/2 lost to Microsoft Windows, which came to market sooner, had more third-party apps, and won over the hardware manufacturers because they could do more with it to make it their own.

There are still people in the technology industry today who talk about how good OS/2 was and shake their heads when they think about why it wasn't more widely adopted by the public. Unless something happens to change the trajectory of Windows Phone 7, a lot of people in tech could be saying the same thing about it a decade from now.

This article was first published on TechRepublic under the title "Windows Phone 7: The OS/2 of this generation?"