Windows Marketplace for Mobile

Apple has boosted its iPhone through a thriving ecosystem of third-party software applications. Microsoft, which used a similar strategy to help make Windows the dominant PC operating system, is now playing catch-up on phones and preparing to launch its own mobile software store.

The long-term outcome will help determine Microsoft’s fate in the booming global market for smartphones, which analysts expect to nearly double by 2012, exceeding 300 million units.

One litmus test will be whether Microsoft can win back one of its own.

In his past job as a Microsoft product manager, Kevin Lisota spent much of his time persuading software developers to write programs for the company’s Windows Mobile operating system. So he didn’t take lightly his recent decision to switch from a Windows Mobile device to an iPhone.

Ironically, Apple’s phone offered an application that he just couldn’t do without. Lisota, founder of Seattle-based online real estate brokerage Findwell, found himself at a disadvantage without access to real estate information through the iPhone application from Seattle’s Zillow.com.

“It boiled down to my business needs — I couldn’t ignore it,” Lisota said, explaining that he still tends to be a “fairly Microsoft-centric guy” even after striking out on his own.

Microsoft offers Windows Mobile through a variety of device makers and mobile operators. Windows Mobile devices compete against iPhone, BlackBerry, Nokia, Google Android and others.

Microsoft is trying to remain at the center of the tech industry as consumers and businesses expand their focus from desktop PCs to smaller devices, such as phones, handheld gaming machines and mini notebook computers.

Windows Mobile apps have been around since long before the iPhone existed, and have been available from a wide variety of sites and services. But Apple has galvanized the iPhone app market through its centralized App Store, collecting and offering iPhone programs that have gone through its approval process.

Microsoft hopes to do the same through its upcoming Windows Marketplace for Mobile.

“We’re making sure that, over time, developers have a way to not only create rich, high-quality applications but to distribute them in a low-friction way to a global customer audience,” said Todd Brix, senior product management director in Microsoft’s Mobile Platforms Services business.

Microsoft officially started accepting developer submissions for the Windows Mobile Marketplace on July 27. The store is scheduled to launch on Windows Mobile phones and on the web this fall, coinciding with the debut of the Windows Mobile 6.5 operating system. Microsoft says the Mobile Marketplace will also be available for devices running Windows Mobile 6.0 and 6.1 later in the year.

The mobile marketplace alone won’t ensure Microsoft’s success, said Matt Rosoff, an analyst at Kirkland-based research firm Directions on Microsoft. The company also needs to come up with a better on-screen interface, and work with hardware makers to develop more compelling phones, he said.

One of Microsoft’s early missteps was its heavy focus on selling Windows Mobile to businesses, not recognizing the big role that consumers would play in determining which phone would prevail.

“When the iPhone came out, they were caught off guard by the success of the consumer smart-phone market,” Rosoff said. “They just didn’t see it coming.”

The idea of a centralized app store for Windows Mobile isn’t new, even though Microsoft itself hasn’t offered one before. Dallas-based Handango Inc. is a longtime player in the market, currently offering apps for all major mobile platforms except the iPhone. It offers a centralized portal at Handango.com and powers mobile application stores for wireless companies, online retailers and content providers.

Handango also offers its InHand mobile store on Windows Mobile and other platforms. Alex Bloom, Handango’s CEO, acknowledged that Microsoft’s application store could hurt his company’s business, but he said it could also raise awareness of Windows Mobile apps in general.

“A lot is going to come down to execution on their part,” Bloom said in an interview. “Hopefully it draws attention to the idea that consumers can get content, and perhaps they’ll shop around to see if they’re getting the best experience and the best applications and the best pricing — and that’s where Handango will have the opportunity to step up and demonstrate value.”

In its effort to attract mobile software developers, Microsoft is promising a transparent and consistent process for approving applications. The strategy attempts to exploit one of the biggest complaints about Apple’s App Store — that the Cupertino, Calif., company isn’t clear enough with developers about when their apps will be accepted, or why they’ve been rejected.

Another weakness of the iPhone is a lack of “multitasking” — the ability to run one third-party application in the background while using another.

That’s a problem for companies such as Glympse Inc., a Redmond startup founded by three Microsoft veterans. People like to run the Glympse location-sharing service in the background while checking email or completing other tasks.

Multitasking is also possible on Windows Mobile, and that’s one of the competitive strengths that Microsoft will be looking to exploit as it tries to build momentum for its own application store.

The popularity of the App Store also makes it tougher for apps to get noticed in the crowd, said Bryan Trussel, Glympse chief executive. Apple offers more than 65,000 apps through the App Store.

“You have to really run the math and say, ‘Do I want to be on the iPhone with a bajillion other applications versus being out early with this initial Microsoft push?’” Trussel said. “There’s some benefit to being one of the first apps on there — it’s not quite as crowded of a marketplace.”

One company that has found success on the iPhone so far is Zillow, a Seattle-based online real estate firm, which reports close to 700,000 downloads of its free iPhone app in its first three months of availability. The Zillow application offers detailed information about homes on a map-based interface.

Zillow says it is, in fact, working on a Windows Mobile version. But Findwell’s Lisota will need to hang on to that iPhone for now, because the timing of its release hasn’t yet been determined.