Microsoft Shakeup Shows Windows 7 Phone is in Deep Trouble

is a sign that Microsoft knows what the rest of the world has known for some time: Microsoft is falling further behind in mobile, and isn't coming back any time soon. It's not clear that this shakeup will help, though.

When Bach retires, he won't be replaced. Instead, senior vice president Andy Lees, the head of the mobile communications business will report directly to Steve Ballmer. So will Senior vice president Don Mattrick, who is in charge of the Interactive Entertainment Business.

The timing of Bach's retirement shows that Microsoft knows that when it comes to mobile, it's in very serious trouble, with Android surging, while Windows mobile sinks. The NPD Group recently released a survey showing that in the first quarter of 2010, Windows Mobile was in fourth place when it comes to units shipped, well behind RIM, Android, and Apple. RIM had 36% of the market, Android 28%, Apple 21%, and Windows Mobile hovering around 10%.

As if that wasn't bad enough, Microsoft's recent release of a new phone, the Kin, was widely derided as being poorly designed, feature-poor, and carrying an overpriced data plan for its target market.

Windows Phone 7 won't be out until the 2010 holiday season, and by that time Microsoft's mobile marketing share will have dipped even further, with Android and Apple becoming even more entrenched. The fact that the shakeup comes now rather than waiting to see what happens with Windows Phone 7 is significant, and shows Microsoft realizes it has to act fast.

Computerworld quotes Matt Rosoff, an analyst with Directions on Microsoft, as saying:

"I would have thought that if Microsoft was going to shake up the division, it would have at least given the current product lineup a chance to succeed or fail...It's possible that senior leadership was not happy with some of the performance in that area, particularly mobile."

That, to put it mildly, is an understatement. It's hard to imagine Microsoft being in any worse shape than it is when it comes to the mobile market.

Of course, recognizing a problem is one thing; solving it is another. Unless Ballmer can figure out a way to get Windows Phone 7 out the door more quickly, Microsoft will remain in trouble when it comes to mobile for the foreseeable future.

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