Will Microsoft Look Pretty in Pink?

Microsoft will hold a press conference on June 12, and expectations are high that it will use the event to launch two smartphones from its secretive “Pink” project.

Among those working on the Pink project are staff who joined Microsoft when it acquired Danger in 2008. Danger used to make the T-Mobile Sidekick, and the new devices are rumored to look very much like the Sidekicks. They may be a stopgap measure designed to maintain Microsoft’s presence in the smartphone market until Windows Phone 7 handsets become available toward the end of this year.

Pink Isn’t Just a Color

Two smartphones from Microsoft’s Project Pink are likely to be unveiled Monday — the “Turtle” vertical slider and the “Pure” horizontal slider, according to reports.

They’ll be manufactured by Japanese electronics manufacturer Sharp, but Microsoft was heavily involved in designing the hardware, as well as the software and operating system.

“Historically, Microsoft has had problems with OEMs building handsets that properly showcased its operating system,” Rob Enderle, principal analyst at the Enderle Group, told the E-Commerce Times. “Project Pink was designed to address that problem.”

Greater involvement by the OS developer in designing hardware is becoming the industry norm, Maribel Lopez, principal analyst and founder of Lopez Research, told the E-Commerce Times.

“When you have multiple handset manufacturers working your operating system like Microsoft and Google have, there’s great potential for inconsistency in deployment, and that’s happening to the Android platform right now,” she explained.

“So, the operating system guys are trying to get a little more deeply involved with the handset guys to improve the experience on the devices, while the handset guys are tweaking the operating systems, which is what HTC has done with Android,” Lopez pointed out. “While there’s more fragmentation now with more operating systems, there’s more cooperation between the operating system guys and the handset guys.”

The new smartphones will have strong social networking capabilities and will be available on Verizon Wireless’ network, according to reports.

“These won’t be typical jack-of-all-trades devices,” Enderle pointed out. “They will be specialized on communications and could be bundled with an aggressively priced data plan for kids like the Sidekick is.”

The smartphones will likely access Microsoft Live and other social networks such as Facebook, Enderle speculated.

Microsoft declined to discuss the devices. “We are unable to comment on rumors or speculations,” Sara Anissipour, at the company’s public relations agency Waggener Edstrom, told the E-Commerce Times.

Sidekicks on Steroids

Chances are, the new smartphones will be Danger Sidekicks with more muscle.

“Microsoft has probably extended the Danger line by adding some smartphone aspects and possibly some apps,” Carl Howe, director of anywhere research at the Yankee Group, told the E-Commerce Times.

That could be a strategic mistake in the long run, Howe pointed out. “Microsoft could end up fragmenting their applications market.”

Still, it’s not as though Microsoft has much choice in the matter.

“There are new smartphones coming out every six months or so, and, with Windows Phone 7 scheduled for release around October, Microsoft had to come up with something as a stopgap,” said Lopez of Lopez Research.

“If Microsoft doesn’t bring out new smartphones now, it will continue to lose market share,” Lopez explained. “It needs something between now and then to keep the Windows Mobile brand going even if that something isn’t Windows Phone 7.”

Redmond needs all the help it can get: RIM was the leading smartphone platform in the United States between December and February with just over 42 percent of the market, according to comScore. Apple was second with just over 25 percent, and Microsoft third with about 15 percent.

Google had 9 percent, up 5.2 percentage points, and comScore predicted that Google will continue to gain market share rapidly as more Android-compatible devices hit the street.

Who Will Turn Pink?

The new devices Microsoft is rumored to have in the works may not cannibalize potential Windows Phone 7 users.

“These are focused on a different segment of the market — folks who can’t afford the monthly charges associated with a full smartphone and really just want a few of the features like email,” Enderle explained.

“Feature phones are better than 90 percent of the available phones on the market, and these devices could actually turn out to be both more lucrative and, with regard to volume, more successful than traditional smartphones if they’re done right — but that’s a big ‘if,'” Enderle said.

“Not all smartphone users are the same,” Lopez pointed out. “There are plenty of opportunities to find niches, and it could be that Microsoft’s looking at the low end of the smartphone line. That’s an area people have paid a little less attention to, so Microsoft’s thinking might be to grab what market share it can and hit the market hard when it comes out with Windows Phone 7 in October.”

The niche for low-end feature phones might be larger than people suspect. “Smartphones make up only 20 percent of the market today,” the Yankee Group’s Howe said. “So there’s an opportunity for something that’s cool, that keeps Microsoft’s product in the market today and will be used by teenagers until they can afford a smartphone.”