Integration, focused investments to propel Windows Phone

Microsoft investing heavily to grow mobile apps market, but analysts reckon backing startups with potential to be "next Angry Birds" and cross-platform integration next big challenges for company.
Written by Kevin Kwang, Contributor

Microsoft has been actively spending its cash to build up its Windows Phone ecosystem by attracting well-known services such as Netflix and Foursquare onto its platform. However analysts think more needs to be done, by investing in promising developers and integrating Windows Phone with Xbox and Windows to widen areas for monetization.

The New York Times reported in April that Microsoft, in order to better compete with Apple and Google in the mobile apps space, has been incentivizing developers to come aboard its mobile platform. It had even financed the development of brand-name apps such as Foursquare for Windows Phone, which would have cost developers anywhere from US$60,000 to US$600,000.

Holger Luedorf, head of business development at the mobile social network company, said in the report: "We have very limited resources, and we have to put them toward the platforms with the biggest bang for our buck. But we are a social network too, and it is incredibly important for us to be available on every platform."

Shalini Verma, principal analyst of Gartner, commented that Microsoft has "plenty of cash" and this would be a good use of its resources because the presence of well-known apps such as Netflix or Foursquare is critical for the success of its mobile platform.

"Financing will certainly help cash-strapped developers to build apps for the Windows Phone Marketplace [and] this strategy would help Microsoft catch up with Google's Android and Apple's iOS."

Marc Hopstein, Windows Phone business lead at Microsoft Asia-Pacific, updated ZDNet Asia that there are roughly 80,000 apps and games on the platform currently, with about 300 new titles added daily. He said there are no available statistics on the proportion of free or paid apps though.

As for whether Redmond is actively underwriting app development in Asia-Pacific, the executive said: "As has been the case in some other markets, we've offered developers in Asia an array of incentives to help start their development process."

Target next big hit
Beyond rapidly populating its app ecosystem, Verma added that the software giant should have a more focused approach in terms of financing developers.

"To go a step further, it needs to finance startups that have the potential to develop the next Angry Birds or Draw Something," she suggests.

Jessica Kwee, research analyst at Canalys, added that since the Marketplace already has most of the must-have apps, Redmond will need to concentrate on big brand name developers and make sure their future apps are on the platform, preferably ahead of other ecosystems. These brand names include game companies such as Gameloft, Electronic Arts, and Zynga, she stated.

Increase monetization opportunities
The Canalys analyst also called on Microsoft to extend its device and Marketplace reach. She noted that while the lack of devices earlier meant there was not as much incentive to open its apps market to many markets, the Nokia partnership changed things. With the Finnish phonemaker's distribution reach, the software giant needs to ensure that wherever Windows Phone devices are shipped, the apps ecosystem is made available to consumers, she urged.

Hopstein acknowledged this and said that as Windows Phone continues to expand into new markets, app developers on the platform reach a wider potential audience. He pointed to the new markets that now have access to Marketplace, including China, Indonesia, Malaysia, and the Philippines, as an example.

He added that, to date, there are more than 110,000 registered Windows Phone developers and more than three million downloads of its developer tools.

There is also a need to closer integrate Microsoft's other platforms such as Windows Store and Xbox Live to reach a wider addressable market, says Verma. "Closer ties could be a potential goldmine for developers seeking to target users of mobile, games and PCs."

The Gartner analyst added that while Redmond has tried to leverage its combined assets, it somehow has yet to "resonate so well" with the developer community.

Editorial standards