Windows Mobile Getting Better, Still A Tiny Business For Microsoft (MSFT)

Microsoft (MSFT) is betting on new services — mostly free — to get people excited about Windows Mobile, its stale mobile operating system. But on their own, they’re not going to help Windows Mobile become more than a small fraction of Microsoft’s business.

The software giant plans to unveil new services at next month’s Mobile World Congress in Barcelona. From the preview Microsoft (MSFT) exec Andrew Lees recently offered the New York Times, and reporting from Microsoft watcher NeoWin last week, it seems Microsoft’s big plans are:

  • A syncing service sort of like Apple’s MobileMe, but free for consumers with Windows, Windows Live, and Windows Mobile. This includes syncing photos and presumably other files, not just email, contacts, and calendar data.
  • Some sort of premium services that the company will sell to prosumers, small businesses, or bigger businesses.
  • A Windows Mobile App Store.

But Microsoft’s Lees plays down Microsoft’s opportunities from making any significant revenue off these services. “His business plan is counting on making a profit simply from charging a licence fee for Windows software to handset makers,” the Times‘ Saul Hansell writes.

So it sounds like Microsoft is still expecting Windows Mobile to be a small business this year. The company only charges $8 to $15 per phone, according to research firm Strategy Analytics. What’s that mean? If Microsoft somehow manages to:

  • Grow mobile phone shipments 50% this year to about 30 million — a challenging feat as the mobile phone market shrinks and competitors like Apple (AAPL), RIM (RIMM), Google (GOOG), and Palm (PALM) gain ground on Microsoft.
  • Get $12 per phone — the median of the range.

That’s still only $360 million, or 0.56% of the $64 billion in sales that analysts expect Microsoft to report this year. Even if Microsoft somehow makes another $360 million from selling premium services and helping developers sell Windows Mobile apps, that’s still barely more than 1% of the company’s sales.

We look forward to seeing Microsoft’s next edition of Windows Mobile. We think the company has a big opportunity here — if they can get Windows Mobile remotely in the same league as Apple, Google, Palm, etc. — given Windows’ huge market share and the vast number of eyeballs on Hotmail, MSN, etc.

But we hope the company is also thinking about how to make more money off the project.

One idea: Making their own hardware. (Fat chance, Microsoft keeps reminding us.)

Another: Trying to capture the same “halo effect” Apple says it gets from the iPod and iPhone — by forcing people who want to use the new, free Windows Mobile services to upgrade to Windows 7 and the latest version of Office.

See Also:
Microsoft’s Mobile App Store Coming Next Month
Memo To RIM, Windows Mobile: Palm Just Kicked Your Butt
Why Microsoft Should Make Its Own Phone: Windows Mobile Revenue Stinks

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.