Can Microsoft make its future mobile?

By Tim Weber Business editor, BBC News website

Sony Ericsson's Xperia X1 is at the high end of Windows Mobile phones

You want a phone that can do it all? Internet, music, photos, films, documents, texting, instant messaging, diary, contacts and ... err ... phone calls?

Then a smartphone is right for you. But as the market for high-end mobiles gets ever more crowded, which should you pick?

The global market leader, Symbian, makes the software that runs most of Nokia's smart phones (and a few others).

Research in Motion with its e-mail friendly Blackberry devices has cornered the corporate market and is pushing into the consumer space.

Apple is minting it with its sleek but expensive iPhone. And only a few months ago internet search giant Google entered the field with its Linux-based Android software, designed to power internet-savvy mobile phones.

Oh, and then there is Microsoft. For years the giant of desktop computing has tried to push into the mobile phone market - not without success, but ultimately remaining a niche player.

Two things held Microsoft back in the past: technology and usability.

For years mobile phone technology simply wasn't advanced enough to play to the strengths of devices that were actually mini computers.

Windows Mobile and other smartphones were held back because they had to "live with the hardware capabilities of the past; key pieces were missing," says Andy Lees, the boss of Microsoft's Mobile Communications group.

The Achilles heel

Samsung's Omnia tries hard not to be an iPhone clone

But the real Achilles heel of Microsoft's devices was their abysmal user interface - firmly wedded to the look and feel of old-fashioned computer desktops, a concept that doesn't work on small screens.

At long last this is changing, although it is not Microsoft doing the job. Instead, phone manufacturers are busy building user-friendly interfaces to sit on the Windows platform.

Take Samsung's Omnia, for example, an all touchscreen phone that tries for an iPhone look and feel without being a rip-off.

It largely succeeds, with its 5 megapixel camera, highly useful expansion slot and overall good looks. On the downside, its touchscreen can at times be infuriating while Samsung's interface designer clearly is not a graduate of the Apple school of cool.

HTC's Touch Diamond is another contender. The Taiwanese company has been at the forefront of pushing the boundaries of what can be done with the Windows mobile platform. Many smartphones sold under the labels of network operators like T-Mobile and Orange are actually HTC designs.

The HTC Diamond does away with the Windows look and feel

The Diamond goes the furthest in changing the way a Windows phone behaves. Its futuristic-looking screen has nice features like a picture-led phonebook: Two clicks and the phone's camera takes a picture of your mate and puts it in an easily browseable "stack" to ensure his or her phonebook entry stands out.

This touchscreen phone, however, exposes another problem plaguing most smartphones: a slick interface requires serious hardware.

When HTC launched the Diamond, using its "Touch-Flo" screen felt like wading through treacle. Now, one memory upgrade later, the phone begins to deliver on its promise, albeit still reluctantly.

This is not just a Windows problem, though. Blackberry's first all-touchscreen mobile, Storm, is suffering a similar if not worse sluggishness, and has been panned by many reviewers and users.

Power hungry

Like all microcomputers masquerading as phones, Windows smartphones are power hungry. Intense usage - phone calls, web browsing, music and office applications - quickly drains the battery.

Here at least Windows devices can play a trump card over Apple's iPhone: their batteries are not sealed in and can be swapped easily for back-ups.

Take the most accomplished Windows mobile tested for this article, Sony Ericsson's Xperia X1. Its user interface can be changed with a couple of clicks to fit the owner's priorities of the moment - search, work or play.

The power hungry X1 boasts a keyboard

It offers a surprisingly handy combination of touchscreen, touchpad, buttons, toggles and most importantly a slide-out keyboard.

All this drains the X1's battery, barely getting me through the day without a recharge - at least on the pre-production models tested.

The tiny keyboard harks back to the days of Psion personal organisers but is very comfortable to use, easily beating any Blackberry (at least for me: large parts of this article were drafted on an Xperia X1).

"Windows Mobile is a very powerful platform for us," acknowledges Sony Ericsson's X1 product manager Magnus Anderson. "It's the perfect fit for both business and pleasure."

The price of being smart

So far, though, these high-end phones are mainly for "early adopters" that need "seamless connectivity of email and office applications," says Mr Anderson - and they have a price tag to match.

The ease of synchronising diaries, documents and email with PCs is indeed a key selling point of Windows mobile devices, one that Microsoft executives are eager to underline as they list the synchronisation and compatibility woes encountered by owners of iPhones and Nokia smartphones.

Smartphones are expensive, regardless whether they run on Windows, Linux, Symbian or the iPhone's OS X, because it is hardware like the touchscreen that is driving up the cost.

That pushes the price of many such phones beyond $300 (£202) - before the network operator's subsidy - and a market share of just 7%.

It takes a lot of usage and high subscription fees to make such phones attractive for network operators to subsidise.

While Apple can ask network operators for hefty payments in exchange for the privilege of selling the iPhone, Microsoft's Andy Lees knows that his software "has to compete with free" - the smartphone operating systems based on open source Linux software.

Meet the Android

T-Mobile's G1 is the first phone to run Google's Android software

Arguably the most promising Linux phone is T-Mobile's G1, designed and built by HTC and running Google's Android software. For a first stab at an Android phone, the G1 is a very accomplished piece of kit.

With an easy to use touchscreen that swivels away to reveal a full (albeit slightly uncomfortable) keyboard, GPS perfectly integrated with Google Maps and an excellent browser, the bulky G1 could be a winner.

Android, however, has a number of drawbacks. Like Apple, Google offers a "marketplace" of applications to customise your phone. The problem is the open source culture of these widgets.

Think Firefox (the browser) extensions gone bad. Most applications have whacky names, poorly worded descriptions and strange customer reviews that will leave G1 owners doubtful whether they should really click the download button - not least as some apps come with a price tag.

More importantly, key software is missing. The G1 cannot be synchronised with a computer's phonebook or diary, and I failed to find even basic office applications like a word processor.

Google executives promise that one day Android's marketplace will deliver, but until then Microsoft's Andy Lees will be able to claim that Android is "a lot less functional" than Windows Mobile.

The cheap alternative

The INQ1 is billed as a social networking phone

Not everybody, however, believes that phones need all that computing power - not least when a credit crunch forces consumers to be careful with their money.

Three, the mobile network owned by Hutchison Whampoa, has just launched the INQ1, a cheap and cheerful device marketed as the "Facebook phone".

The INQ embodies a back-to-the-roots approach. Operators were wrong to assume that customers want phones for computing on-the-go or to download music, says Three's Guy Middleton. The reality is that phones are all about communication - not just voice, but email, instant messaging, Voice over Internet and especially social networking.

The INQ's phonebook, for example, pulls in the profile pictures of your friends' facebook pages, shows you their status updates and whether they happen to be online.

Packed into a cheap handset, it allows network operators to offer highly competitive tariffs, says INQ boss Frank Meehan.

Windows everywhere?

Microsoft's strategy, however, aims far beyond the middle ground between INQ and iPhone.

Apple's iPhone is still the smartphone benchmark

Offering "Windows Mobile" as a reliable and highly customisable platform allows handset makers and network operators to flood the market with a large number of new and startlingly diverse smartphones.

"People want to live their lives through the device," says Mr Lees, "use it for text, music, social networking, sharing photographs, ever richer experiences."

"The Windows Mobile is the computer that is with you 24 hours a day, seven days a week."

Combine this with the fact that Windows software also powers more and more "embedded" devices such as clever fridges, car electronics and vending machines and we might soon find ourselves in an integrated world held together by Microsoft software.

Challengers

The company's ambitions will not go unchallenged.

Microsoft's nemesis Linux is also a big player in the embedded market. Google's experience in making software user-friendly will turn the Android/Linux combination into a formidable competitor.

Nokia, meanwhile, keeps pushing into the smartphone market, most recently with its N97, which the Finnish company describes as the world's "most advanced mobile computer".

Andy Lees appears unruffled. For the next 18 months he promises a string of Windows mobiles with "very interesting form factors".

Microsoft, he says, is "in this for the long-term".

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