Microsoft made a mistake with its mobile strategy, says Bill Gates

Microsoft co-founder Bill Gates admits the company's late start with smartphones cost it the chance to be a market leader in mobile

Ever since the iPhone debuted in 2007, Microsoft has struggled to adapt to the quickly changing smartphone world--and company Chairman Bill Gates knows it. "There's a lot of things, like cellphones, where we didn't get out in the lead very early," Gates said in an interview with Charlie Rose that recently aired on CBS This Morning. "We didn't miss cellphones, but the way we went about it didn't allow us to get the leadership. So it's clearly a mistake."

Microsoft was very late to adapt to change as Apple's iPhone and handsets loaded with Google's Android mobile operating system exploded in popularity. The software giant finally got its act together in late 2010 when it released Windows Phone 7, a touch-centric, attractive looking mobile OS that replaced the decrepit Windows Mobile platform.

Despite a positive critical reception, however, Windows Phone 7 wasn't a smash hit. By early 2012, in fact, market research firm Nielsen said Windows Phone claimed fewer users than the aging Windows Mobile platform in the U.S.

There are many opinions about why Windows Phone 7 failed. Overall, however, poor carrier support, a comparatively sparse third-party app store, and Windows Phone's unique interface kept users from adopting the new smartphone lineup en masse. In September 2012, a month prior to the launch of Windows Phone 8, Microsoft handsets claimed about 3.6 percent of U.S. smartphone users, according to metrics firm comScore.

It's only gone downhill since then. The stats for Windows Phone are even worse today, with Microsoft handsets claiming just 2.9 percent of the American smartphone market as of December, based on the latest numbers from comScore.

But it's not all bad news for Windows Phone 8.

Nokia, Microsoft's largest smartphone partner, has released new low- and high-end Windows Phone devices. More phone manufacturers, including LG and Asus, may announce Windows Phone 8 devices in the coming weeks, possibly during Mobile World Congress in Barcelona, which starts next Monday. LG dumped Windows Phone last April; the company said at the time that it had no plans to release more Windows Phones, citing poor sales.

Global sales of Windows Phone devices increased by just over 124 percent during the last three months of 2012 compared to the year previous, according to a recent report from market research firm Gartner. Another report, this time from IDC, said Windows Phone worldwide device shipments grew by 150 percent during the last quarter of 2012. (IDC and PCWorld are both owned by International Data Group.)

Based on IDC's numbers, Windows Phone is closing in on BlackBerry and could overtake its closest rival to become the third-most popular smartphone platform worldwide. Even so, the research firm reports that Windows Phone accounted for just 2.6 percent of the worldwide market at the end of 2012, trailing way behind Android at 70.1 percent and iOS at 21 percent.

There's little doubt that Microsoft has made mistakes in its cellphone strategy over the past five years, but so has BlackBerry, Hewlett-Packard, and the now defunct Palm. The good news for Microsoft is the future is looking a little bit brighter for Windows Phone, and the best days could be yet to come if the company's cross-platform vision for Windows bears fruit.

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Ian Paul

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