With Mango software update, analysts ask, where's the hardware?

Microsoft names 3 more smartphone makers, says Mango-based phones coming in the fall

It takes more than a sleek operating system to make a successful smartphone. Even with the 500 improvements announced Tuesday in the Windows Phone OS update called Mango, some analysts are concerned that Microsoft didn't show any new hardware to ship in the fall with Mango installed.

At an event in New York City, Microsoft named three new hardware manufacturers, Acer, Fujitsu and ZTE, that will produce Mango-based smartphones that ship in the fall. Currently, Windows Phone 7 runs on phones made by HTC, Samsung and LG.

Andy Lees, president of Microsoft's mobile communications group, said Microsoft is already running Mango on Nokia phones in the lab, building on its partnership with Nokia announced in February.

But that news wasn't enough for analysts who noted that an OS update is part of a smartphone's success, which also involves having a large group of manufacturers, carriers, app developers, as well as the hardware, specifically a smartphone.

"It was disappointing there were no hard device announcements and instead we heard they would come out with phones in the fall," said Ramon Llamas, an analyst at IDC. "I would have loved to see a summertime launch."

Getting an update on new hardware earlier would help Windows Phone adoptions, which have lagged, Llamas and others noted. "The name of the game [in smartphones] is volume and distribution," he said. "I would like to know what Microsoft is doing between now and the fall."

Llamas generally liked the communications, applications and Internet improvements announced for Mango, although many were "smaller, incremental changes" and some haven't been fully described. Two improvements that Llamas liked in the software are the ability to group together contact information and having Microsoft's Bing search engine deeply integrated into Windows Phone.

Still, Llamas added, "when you are buying a smartphone, you are buying the experience and the ecosystem."

Ross Rubin, an analyst at NPD, said Windows Phone 7 has been an OS "that's behind others and has to make up ground," which made the focus on Mango at the Tuesday event important. But he also came back to the value of new hardware, adding: "It was certainly a positive move adding more hardware manufacturers to the mix, and Nokia will be a high volume partner, [but] we're going to have to see the kinds of finished products that companies ultimately offer to consumers and how different they are from Android and iPhone... We need to see stronger carrier support for Windows Phone in the U.S. and we also need to see where the combination of software and hardware work together in a compelling case for Windows Phone handsets."

Both IDC and Gartner have forecast that Windows Phone will move to the second best-selling OS by 2015 behind Android but ahead of the iPhone and BlackBerry devices.

That move to second place will occur largely because of Microsoft's partnership with Nokia, bringing Windows Phone up from fifth position and 3.6% market share in Gartner's latest count from the first quarter 2011. With Windows Phone 7, Microsoft only sold 3.6 million smartphones in the first quarter, one-tenth of the 36.2 million Android smartphones sold in the same quarter.

Carolina Milanesi, a Gartner analyst, agreed that it is "hard to judge" Mango because there is no final hardware for trying out the new software. But she defended Microsoft's OS improvements and said Microsoft's partnership with Nokia has not lessened interest from at least the three newly announced manufacturers.

"I'm not sure [today] is much about hardware ... [but] about delivering a stronger experience on whatever hardware you have, and having had hardware at the launch of Mango might have taken away from what matters, which is software," she said.

Milanesi said WP7 sales have been slow, not because of its smartphone hardware but because some buyers believe WP7 lags behind other smartphone OSes. "This is what Mango is trying to address," she added.

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