Mobile

Why Windows Phone 7's first day sales numbers don't matter

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In lieu of actual first day US sales numbers from Microsoft, everyone seems to be predicting doom and gloom for the Windows Phone 7 platform. Microsoft may have sold as few as 40,000 phones on Monday, a “market research source” tells the financial site TheStreet. Meanwhile, CNet reporters noted that a San Francisco T-Mobile store didn’t have much luck pushing its WP7 wares.

While I’m normally one to eagerly follow launch numbers as well, I’ve become increasingly convinced that for this particular product launch, the actual first day sales don’t matter.

Why? Because Microsoft is in this for the long haul. It doesn’t matter if Windows Phone 7 sales were poor (not likely) or off the charts (we likely would have heard by now if they were). Microsoft is going to dump as much money, time, and energy into the platform as necessary to make it relevant again in the mobile market. It has to succeed, otherwise it will lose its mobile presence completely.

Failure isn’t an option since competitors like Apple and Google are raking in billions from their mobile endeavors. Google announced last month that it’s making $1 billion a year from mobile ads (a number that could double or triple by next year). Apple, meanwhile, made $8.6 billion from sales of the iPhone this quarter and is set to gain a bigger chunk of the mobile advertising market when its iAd mobile advertising service hits the iPad this month with the iPhone OS 4.2 update. In addition to landing on the iPad, Apple is also working on bringing iAd worldwide — it’s been restricted to the US and UK thus far.

And as much as the company is ridiculed, Microsoft isn’t stupid. … Okay, the Kin phones were stupid. But Windows Phone 7 isn’t the Kin. This time around Microsoft has multiple carriers, multiple hardware partners, mature software, and perhaps most importantly, it has a plan. It’s marketing the phones directly to consumers who seem to despise iPhone and Android user habits (see, the “Really?” ad), and there’s still a significant population that hasn’t yet committed to either camp.

Microsoft will likely also take advantage of RIM’s inability to keep up with Apple and Android. Dell just recently announced that it’s dumping 25,000 BlackBerrys company-wide and is opting for Windows Phone 7 and Android devices instead. Practically every independent quarterly sales report we cover notes RIM’s declining sales, and RIM doesn’t have any flagship smartphones on the horizon to replace its undercooked BlackBerry Torch.

In my testing, WP7 devices unquestionably offer a better consumer experience than anything RIM has to offer, and Microsoft is also aiming for business users with the best Office integration on any mobile platform. If RIM continues at its current rate, I wouldn’t be surprised to see Microsoft shipping more phones than RIM by this time next year.

Microsoft has already committed $500 million to marketing Windows Phone 7, and I suspect that number will reach even more obscene levels throughout 2011. Microsoft may not always be first to the market with innovation, but it has a habit of persevering until it achieves some sort of success. Take the Xbox, for example. Microsoft lost $4 billion on the first generation Xbox, but then the Xbox 360 went on to find success in this most recent console generation and earned the company $20 billion as of January 2010.

Similarly, but less successfully, Microsoft persevered with its Zune music players — which led to the slick-looking Zune HD, and ultimately to Windows Phone 7’s user interface.

Microsoft likely isn’t aiming for the No. 1 smartphone spot. Even if it managed to push out more devices than Apple, it could never keep up with Android’s sheer ubiquity. But placing second, or even third, is certainly better than not being in the game at all. And you can rest assured that Microsoft will do whatever it takes to regain its mobile relevance — no matter what the numbers say about Windows Phone 7’s launch day sales.

Front photo via Preetam Rai

Trackbacks

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