Can Microsoft's Windows Phone OS surge in market share?

At Build conference, update to version 8.1 expected; two Nokia phones also due, but are they enough to boost WP market share?

Microsoft is expected to launch an update to its Windows Phone platform to version 8.1 at its annual Build developer conference on Wednesday, followed by a separate Nokia event later in the day, reportedly to announce two phones running the new OS.

The question arises whether the update or related Microsoft moves later in 2014 will make much of a difference in Windows Phone's future, especially since it still lags well behind the Android and iOS stores in providing mobile apps for users.

The platform's global market share hovers at just under 4%, a level that hasn't improved much since the first version, Windows Phone 7, was launched in October 2010. The predecessor to 8.1, Windows Phone 8.0, launched in October 2012.

Microsoft is still on track to finalize its purchase of Nokia's handset division for $7.2 billion by the end of April, but the value of that acquisition is being viewed skeptically by many.

The 8.1 update is expected to include features that analysts said won't be anything special when compared to market leaders Android and iOS. Rumored features include a new notification center and Cortana, the code name for Microsoft's new voice-activated digital assistant, which compares to Google Now and Apple's Siri.

A Windows Phone 8.1 Preview for Developers could be announced Wednesday, but won't be released until April 10, according to WPCentral.com.

Microsoft wouldn't comment on what will be announced at Build, which runs Wednesday through Friday in San Francisco.

A limited number of developers reportedly have already seen the 8.1 preview, some since February.

Microsoft is expected to announce Windows Phone 8.1 early Wednesday, and later that day Nokia is likely to launch the Lumia 630 and Lumia 930 smartphones -- both running Windows Phone 8.1 -- at a separate event.

Online rumors have persisted for weeks that Nokia could also unveil a smartphone code-named Goldfinger, which would have no physical buttons and would use sensors to detect gestures. Nokia hasn't commented. Gestures are already used in a limited fashion in some Android smartphones, although the technology's performance so far has been inconsistent.

Despite the pre-Build rumors, analyst Patrick Moorhead of Moor Insight & Strategy said he expects Microsoft won't make any "earthshaking" announcements with Windows Phone. "I wish they would," he added. "They have a lot of work to do. Their fundamental problem is they lack the ability to capture the hearts and minds of consumers with unique content or apps or usage models."

Where are the apps?

Even with hardware and software improvements, including a digital assistant, Microsoft still will have trouble getting over its limited number of apps, which even average users need. "They've done a good with job with providing the 100 top apps, but the long tail [of many more apps] is still important to people."

The Windows Phone store had more than 240,000 apps in late February, with more than 500 added each day, according to a blog from Joe Belfiore, Microsoft's corporate vice president of Windows Phone.

By contrast, Google Play and Apple's App Store each have more than 1 million apps.

Windows Phone was late to the smartphone game, and that hasn't helped with app development. Moorhead gave the example of how Android and iPhone users grew accustomed to using a range of apps that aren't in the top 100 but are still deemed important.

"Say I have a club soccer team app on either Android or iOS and don't have it on Windows Phone to check scores," he said. "That's an issue. Only a small percentage of people need that app, but if it's you, it's important."

When Windows Phone first emerged, HTML 5 Web-based apps were seen as a quick way for Windows Phone to catch up with Android and iOS apps. But HTML 5 hasn't lived up to its promise, partly because it's hard to get snappy performance from HTML 5 Web apps. Future updates to HTML 5 could help, Moorhead said.

"What Microsoft most needs to do is remove the main objection to their phones, which is the number of apps," Moorhead added. "Customers must wait for the Microsoft ecosystem of apps, or wait for a more mature version of HTML 5, or Microsoft must support Android apps."

Moorhead said Microsoft could gain significant market share with technology he calls "modularity" that would include a quick and easy way to connect to Microsoft apps and services from devices of various sizes.

"If I could set my Windows Phone on a charging mat when I get home, then it wirelessly connects to a big monitor and keyboard and -- voil -- I can start typing," he said. "Instead of seeing only five or so tiles on my phone, I'd be able to see 50 tiles on the larger screen. That's something I would hope would demonstrably increase market share for Windows Phone."

Moorhead said one of Build's biggest insights will be ways that Microsoft further aligns itsWindows Phone 8.1 with the desktop OS Windows 8.1. "But to me, that's not something that demonstrably moves the needle in terms of Microsoft's market share," he said.

Belfiore noted in his blog that research firm IDC had seen Windows Phone growing by 91% year-over-year, but the mobile OS still starts from a small share. Even in the enterprise market, Windows Phone is "slowly losing the opportunity to be meaningful because both Samsung and Intel are banking on a very enterprise-worthy Android," Moorhead said.

"I don't see anything from Microsoft in 2014 to radically change its market position, and they are losing options on what they can do," Moorhead said. "Build still gets developers who have an incredible respect for Microsoft in the data center and unified communications, but for mobile developers, Microsoft has to prove the case that they are in fact a platform [that developers and users] can be on. They have to tell the story to say why they'll reach 20% to 30% market share in the next five years."

This article, Can Microsoft's Windows Phone OS surge in market share?, was originally published at Computerworld.com.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

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