WP7 smartphone supplies 'tight,' Microsoft says

But availability expected to improve in coming weeks

Windows Phone 7 (WP7) smartphones have only been on sale since Monday at two wireless carriers in the U.S. and already Microsoft is saying "initial supplies are tight."

A Microsoft spokeswoman said via e-mail that "initial supplies are tight," with some customers "disappointed to learn their local stores are already out of stock. We hear their concerns and are working diligently with out partners to bring more phones to stores in the coming weeks."

However, that doesn't mean customers can't buy the three models of WP7 smartphones from T-Mobile or AT&T. A Computerworld spot check of Boston area stores on Thursday found all three models available, albeit in small numbers. They were also available via the carriers' Web sites.

A T-Mobile spokeswoman said there is no shortage of its only WP7 phone, the HTC HD7, despite a short-lived sell-out of the device on the company's Web site earlier in the week.

For its part, AT&T didn't admit a widespread shortage, although a spokeswoman said "some stores may temporarily be out of a particular model. But customers can expect regular shipments of additional inventory every few days."

AT&T began selling the HTC Surround and Samsung Focus smartphones on Monday and will soon seel the LG Quantum, too.

The description of a "tight supply" has fueled speculation that Microsoft could be holding back supplies artificially to bolster the impression the smartphones are hard to get and, therefore, popular.

How the phones do in their first few days on the market is critical to Microsoft, especially since it has spent $500 million on a record TV ad campaign for WP7 and is badly needs to restore its image in mobile computing after problems with the Windows Mobile OS and the early termination of its Kin phones .

Avi Greengart, an analyst at Current Analysis, argued that "conspiracy theorists would claim that [WP7] shortages are deliberate to make it seem like demand is higher." And while some retailers do limit supplies for products such as popular athletic sneakers, that's "not a common practice for cell phone vendors who genuinely want volume sales -- and certainly not for platform vendors [such as Microsoft] who are trying to establish an installed base for developers to target."

Greengart said his own checking with channel suppliers indicated each store is getting a "very limited number" of WP7 phones.

From Computerworld's spot check in the suburban Boston area, a T-Mobile USA corporate store and an AT&T corporate store both claimed to have supplies of three different WP7 phones as of mid-day Thursday. There were "quite a few" of both the HTC Surround and the Samsung Focus at the AT&T store in Framingham, Mass., a store clerk said. And there were seven HTC HD7 smartphones in stock at the T-Mobile store nearby, a clerk said.

Those numbers pale in comparison to early iPhone and Android phone sales and supplies.

Word of a "tight supply" of WP7 phones -- even as some devices are still in stock at stores -- may bolster the view that interest in them in the U.S. is so far lukewarm.

The Register, based in London and San Francisco, wondered in a headline, " So did Windows Phone 'bomb in the U.S.'? " The article noted that Microsoft sold just 40,000 of the handsets on Monday in the U.S., but questioned that number because it came from an unnamed source using unverified data. The article also noted that Microsoft and the carriers hurt themselves by launching on a Monday instead of a Friday or Saturday.

Jack Gold, an analyst at J. Gold Associates, said there could be a legitimate shortage of WP7 phones due to a shortage of displays that's affected Android phones in recent months. The display shortage affected mainly AMOLED displays -- the same display used in the Samsung Focus -- this past summer, as well as some LCD screens, Gold noted.

Even if the shortages are real, Gold added, "I don't think the demand for WP7 is near as strong" as for other new smartphones." WP7 shortages may have an effect on overall sales "but are probably not fatal or maybe not even all that visible to potential buyers."

Rob Enderle, an analyst at Enderle Group, said industry sources told him that WP7 phones are "having supply problems at the moment," but called it "a typical problem with a worldwide launch." He blamed the problem on "logistics" that spread the phone supplies "thin."

There were also reports of WP7 shortages in Europe when the phones went on sale in late October.

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