Microsoft unveils localized Windows Phone 7.5 for China

Microsoft is partnering with Nokia, HTC, Samsung and ZTE to launch Windows Phone devices in China

Microsoft unveiled its localized Windows Phone 7.5 operating system for China on Wednesday, as the company's partners prepare to bring the mobile OS to the country for the first time.

Microsoft displayed handsets from Nokia and HTC using the localized OS during an event in Beijing. The U.S. software giant is also partnering with Samsung and ZTE to launch Windows Phone devices in China later this year.

Microsoft's share of China's smartphone operating system market is only 2.8 percent, according to research firm Canalys. But the tech giant is aiming to surpass Google and Apple for the top spot, said Simon Leung, CEO for the company's Greater China region, during a meeting with reporters. Over time, prices for no-contract Windows Phone devices will be brought down to 1,000 yuan (US$158), and consumers will also have more choice in handset offerings, he said.

In addition to localizing Windows Phone 7.5 with the simplified Chinese characters used in China, Microsoft has added apps for Chinese social networking and microblogging sites to replace those for Facebook and Twitter, which are blocked in China. Currently, there are 2,000 Chinese-language apps built for Windows Phone devices, out of a total of 70,000 apps in the Windows Phone Marketplace.

Globally, Microsoft's share of the market for smartphone operating systems remained small at 1.5 percent in 2011, according to Canalys. Google's Android OS had a 49.5 percent share, while Apple's iOS had a 19 percent share.

Canalys, however, expects Windows Phone 7.5 will increase Microsoft's smartphone OS market share to 6 percent this year, and to about 12 percent in 2013, according to Nicole Peng, an analyst with the research firm.

A key driver behind that growth will be Nokia, which has adopted the Windows Phone OS for its smartphones and shown the most commitment to it, Peng said.

The Finnish handset vendor was still the largest smartphone vendor in China with a 31.3 percent share in 2011, according to Canalys. But experts have said Nokia's dominant position in the country has been eroded by competition from Android smartphones manufactured by rivals including Samsung and Huawei Technologies.

"There is still a lot of room for China's smartphone vendors to grow, so I don't think it's too late for Microsoft," Peng said. But Microsoft's Windows Phone OS will need to be featured on a competitive product, one with strong hardware specs, and good price points. Currently, no-contract Windows Phone devices generally cost between $400 to $450, but the price needs to reach closer to $200, Peng said.

HTC has already started pre-orders in China for its HTC Kaixuan smartphone, which uses the Windows Phone 7.5 OS and will go on sale later this month for close to $700 with no contract. Nokia plans on holding a "launch event" for its Lumia phones in the country next week.

China is expected to surpass the U.S. in smartphone shipments this year, according to research firm IDC. 137 million smartphones will be sold in the country in that time.

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