Will Windows Mobile become extinct?

Analyst Opinion – Microsoft has been a key player in the mobile device market since the early days of smartphones with its Windows Mobile Operating System (OS). And because of its affinity to the Windows desktop and Microsoft programming models and middleware, it garnered a substantial share of early smart phone deployments in the enterprise, second only to Blackberry. However, over the past two years, its grasp has been slipping and its market share eroding both because of market forces and because Microsoft has not kept pace with the accelerated rate of developments in the mobile arena.

Through lack of focus, lack of vision, or both, Windows Mobile has been relegated to the ranks of an also-ran as new generation devices and OSes take command of a mobile device market that is much less segregated between consumer and enterprise devices than it once was. So, should Microsoft remain in the mobile OS market?

The initial premise for Windows Mobile was that companies will deploy apps on it based on its programming model and feature set compatibility with Windows. But this is no longer a compelling argument in many companies which are increasingly adopting alternative devices from Apple, Blackberry, Nokia, Palm, etc. ActiveSync, which enables the all important synching to Exchange and increasingly to other Microsoft products as well, is being freely licensed by Microsoft and used by Apple, Palm, Nokia, and others (but not by Blackberry).

Microsoft has been very slow in updating Windows Mobile. The next major version (Windows Mobile 7) which might bring it close to competing with the likes of iPhone, Android, Palm WebOS and Blackberry, won’t be released until next year. It is unlikely Microsoft will be able to catch up and remain competitive with such delays in getting new OSes to market. A sub-release is coming soon (Windows Mobile 6.5), but its unlikely to offer a compelling reason to upgrade.

Microsoft is also losing the support of its stalwart device makers to the competition. HTC, the largest supplier of Windows Mobile powered smartphones, is making a major commitment to Google’s Android, as is Motorola. Palm, also a major supplier of Windows Mobile devices, has bet heavily on its rejuvenation through its own WebOS. And HP, who has long supported the Windows Mobile strategy targeted at the enterprise user, has not had any real impact on the marketplace with its devices.

In the recent past, many companies would have specified that Window Mobile be the only officially sanctioned OS to power its deployed smartphone devices. I see few companies who currently retain that policy. Most companies are coming to the realization they must support a number of different platforms demanded by their end users. Many are moving to a more “cloud-centric” environment to allow support for a variety of platforms including the upcoming Netbook space where Windows does have a good shot at remaining relevant and competing with Linux.

The “iPhone phenomenon” is gaining significant strength in most companies, and fewer organizations now forbid user- selected devices to be used within the company, with some restrictions focused on security and management. Since Windows Mobile is not a user demanded system (consumers have largely abandoned Windows Mobile), it will have a tough time competing.

I believe that the most important part of Microsoft’s mobile strategy going forward should be based on maintaining and enhancing the features and functions of ActiveSync to its strategic advantage. It is unlikely the share of businesses running on Exchange will decrease anytime soon (despite Google’s desire to move everything to the cloud). ActiveSync will be Microsoft’s gateway into the wider world of mobile devices of all types, and it is here where it should deploy and maximize its resources.

Bottom Line: Mobile is important to Microsoft, but Windows Mobile represents a small part of Microsoft’s overall business and is costly to maintain. Microsoft would do better to focus on enhanced connectivity to its collaboration systems from all device types and do that very well, and abandon its desire to control the mobile OS – a battle it can not win. I expect Microsoft to realize this and exit the mobile OS space within the next 1-2 years.