Microsoft bets big on new phone software

NEW YORK (AP) — Microsoft Corp. knows the cell phone world is where it’s happening, and it’s determined to be a part of it.

After years of declining sales of phones based on Microsoft’s Windows Mobile software, the company is starting with a fresh slate — a completely new operating system for phones.

The new handsets will go up against Apple Inc.’s highly popular iPhone and the expanding number of phones running on Google Inc.’s Android operating system.

The first phone with Windows Phone 7 will be the Samsung Focus, which hits AT&T Inc. stores Nov. 8 for $200 with a two-year contract requirement, Microsoft said Monday. It will be closely followed by two more phones for AT&T, made by LG Electronics Inc. and HTC Corp., and one for T-Mobile USA, also made by HTC.

In May, Microsoft launched another new phone software package, Kin, only to yank it about two months later in the face of dismal sales. Windows Phone 7 is a different beast, and Microsoft is putting its full weight behind it.

In all, Microsoft announced nine phones for the U.S. market on Monday, including one from Dell Inc., and it has lined up 60 carriers in 30 countries to carry Windows 7 phones.

Another U.S. carrier, Sprint Nextel Corp., is getting a Windows 7 phones in the first half of next year.

In the most recent quarter, Microsoft’s older system, Windows Mobile, accounted for just 5 percent of the worldwide smart phone market. That compares with 41 percent for Symbian (mainly used by Nokia Corp.), 18 percent for Research in Motion Ltd.’s BlackBerry phones, 17 percent for Android and 14 percent for the iPhone, according to research firm Gartner Inc.

From a hardware standpoint, the Windows 7 phones are indistinguishable from high-end Android phones: They have big touch screens, and a few models have slide-out keyboards.

To stand out from the competition, Microsoft has given the software a different look. It is centered around “tiles” on the front screen that are supposed to tell the user at a glance about important new information, such as e-mail and Facebook status update.

For example, a weather program might show a constantly updated snapshot of weather conditions; photo or music libraries would be represented by a recent snapshot or the cover of the last album played on the device.

Both the iPhone and Android are fundamentally more application-centered — the user has to tap on an application to see new information. However, some companies including Motorola Inc. have designed overlay software for Android that’s reminiscent of Windows Phone 7’s information-at-glance idea.

“We want you to get in, get out and back to your life,” Microsoft CEO Steven Ballmer said at a launch event in New York. He called it “a very different kind of phone.”

Gartner analyst Carolina Milanesi said the user interface is “a huge improvement” over Windows Mobile, but Microsoft “is catching up with the competition rather than leapfrogging it.”

The software is designed to work well with Microsoft’s cash-cow Office applications and to connect to Xbox Live, the company’s online game service.

To make Windows Phone 7 a success, Microsoft has to win over not just phone manufacturers and phone companies, but software developers. The iPhone and Android are popular in part because of the tens of thousands of tiny applications, or “apps,” made by outside software developers.

Although there are lots of applications written for Windows Mobile, they won’t work on Windows Phone 7, so Microsoft has to recruit a whole new base of developers.

Here, Microsoft faces a classic chicken-and-egg problem: Software developers may not want to devote resources to building more apps until Windows phones gain popularity, but consumers may hold off buying until there are more apps.

Microsoft is hoping its long history as a developer-oriented company will help. The company released a tool kit based on existing Microsoft software that should make it easier for an experienced Windows programmer to cross over into Windows Phone 7 apps. To build an iPhone app, for example, those developers would have to learn Apple’s way of doing things first.

Microsoft showed off apps from game publisher Electronic Arts Inc. and the Internet Movie Database on Monday, but a broader base of developers will be crucial.

Among suppliers of components for the new phones, San Diego-based wireless technology developer Qualcomm Inc. is a winner. Every one of the nine phones Microsoft showed off Monday uses a Qualcomm “Snapdragon” processor. The speedy chips have previously showed up in Android phones.

Shares of Microsoft, which is based in Redmond, Wash., gained 2 cents to close Monday at $24.59.

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AP Business Writer Andrew Vanacore in New York and AP Technology Writer Jessica Mintz in Seattle contributed to this report.

The Associated Press