Andrew Walmsley on Digital: Microsoft dials in to future

The company's launch of Windows Phone 7 is symptomatic of a shift in the battle for the internet.

Last month, a funeral was held in Richmond, Virginia that may turn out to have been premature. That's not something you can say about many funerals; they tend to imply a certain finality. However, as employees bearing giant iPhones and BlackBerrys followed hearses through the Microsoft campus to celebrate the launch of Windows Phone 7, there was widespread scepticism that it would, as they claimed, 'bury the competition'.

Never let it be said that geeks can't do wordplay. But as debate about the software giant's new mobile operating system abounds online, is this significant, or just more nerd rage?

It's certainly significant for Microsoft. Chief executive Steve Ballmer recently missed out on a chunk of bonus due to the company's continued failure to get to grips with mobile.

Windows might have more than 90% of the desktop market, but, in the UK, it has just 7% of the mobile market (and it performs little better in other mobile territories).

Symbian, the operating system used by Nokia, has the lion's share of the European market, thanks to its use in smartphones. It is losing ground, though, largely to Apple's iOS and Google's Android. BlackBerry maker RIM leads the US market with a 40% share, but it is third in the UK, where it, too, is losing out to Apple and Google.

What can we draw from all this? First, all the buzz about the iPhone's dominance is merely Soho-talk; visit most ad agencies and you'll find it hard to believe there are other models available. Second, Windows Phone 7 is launching into a fiercely contested market, with big, well-funded incumbents and established user bases.

However, this is actually a battle for the future of the internet, and Microsoft wants it bad.

New comScore research shows we could be underestimating the potential of the mobile internet. Far from being in the vanguard of mobile internet use, Europe is the laggard, way behind Japan and, perhaps more surprisingly, even the US.

The Japanese are the most conn- ected, with more than 75% of them consuming online content (browsing, using apps and downloading) via their mobile phones. In contrast, only 44% of Americans, and just 38% of Europeans, do the same. Meanwhile, 22% of Japanese people watch video on their phones, compared with 5% of consumers in the US and Europe. Moreover, in that all-important retail category, 7% of the Japanese buy online via their mobiles, while for the US and Europe the figure is 5% and 4% respectively.

The positions are reversed for text messaging, with 82% of Europeans using SMS compared with 41% of the Japanese. There may be cultural reasons for this, but it might also be that patterns established in early adoption are harder to shift in Europe.

So in Europe, it's hard to see just how quickly mobile internet is developing around the world. Few businesses have mobile websites, even fewer have good ones, but those launching services are finding that the demand is already there. One travel company took 3% of its online revenue via mobile last year, rising to an expected 10% this year.

Market demand isn't enough, however. For Microsoft to grab share, it has to wrestle customers away from Apple and Google.

The Richmond parade featured a toe-curling Michael Jackson dance routine (go to bit.ly/cjszHO). But despite the fanboy excitement - one Argentinian blogger 'couldn't sleep the night before' - Microsoft has a lot more work to do before 'thriller' is regarded as an appropriate adjective for Windows Phone 7.

- Andrew Walmsley is a digital pluralist.

30 SECONDS ON ... Windows Phone 7

- Microsoft's Windows Phone 7, released in Europe and Asia this week and in the US next month, was originally given the more verbose title of Windows Phone 7 Series. Microsoft shortened the name following criticism from previewers.

- 'Customers want a simpler way to say and use the name consistently,' said Microsoft.

- The first handset manufacturers to use the operating system will be HTC, Dell, Samsung and LG.

- The default setting for Windows Phone 7 prolongs battery life - the dark theme, created with a higher-than-standard proportion of black pixels, emits less light on OLED screens.

- The system gives users direct access via 'hubs' to online services such as Facebook and Gmail. The Music and Video hub links to Microsoft's Zune site and the Games hub to Xbox Live.

- Microsoft has launched an advertising platform exclusively for Windows Phone 7; one feature is 'ad tiles' appearing next to the apps.

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