Slide shown by Microsoft's Robbie Bach at Thursday's Financial Analyst Meeting.

Robbie Bach, president of Microsoft's Entertainment & Devices Division, discussed the future of the company's mobile-phone initiatives during one part of his presentation Thursday at Microsoft's annual meeting with financial analysts in Redmond. As noted by Mary Jo Foley, he didn't go into detail on long-term plans for Windows Mobile 7 or the long-rumored "Pink" project.

But he did provide a broad outline of the company's strategy as it tries to regain traction in the mobile phone business. Will it actually work? Read on for an extended excerpt from Bach's remarks, from the official transcript.

"Now, the slide that you see here, the marbles that you see on the slide depict volume for the latest quarter's results, based on the four or five largest guys in the marketplace. And the arrow across the bottom indicates sort of market position, let's say, by who is the target audience, or the people who are generally buying those devices.

"And the basic trends you've seen are the following. Nokia has been leader in the space for a long time. But, as the market has shifted to smartphones, their share has declined in the smartphone space. They have some particular challenges in the U.S. So, they have interesting things to work on and manage. RIM would have started on the left in the business space. They've actually grown their volumes pretty successfully in the last year by expanding across more into the customer space. Apple, obviously a relatively new entrant over the last 18 months, but has been successfully building from the consumer side. And Google is small here because they only have one or two devices in the market, plenty of rumors and announcements about things that are coming this fall. We'll see how the marble grows in size over time.

"For Microsoft, our success has predominantly been on the business side. And certainly we know that in the marketplace people no longer think about things as a business phone versus a consumer phone. They just want their phone, and the phone has to do very well for what they do in business and very well for what they do in their personal life. So, our strategy has to be based on taking the success we've had in business and continuing to grow that, and then expanding that success across to consumer scenarios. So, that we can both move that marble to the right as well as grow the size of the marble and gain share.

"And when you think about this, this is not something that's going to play out over three or six months. Smartphones today are about 15 percent of the total phone market. So, this is something that's going to play out over the next three to five years. Certainly, there's plenty going on now. I think there's going to be a lot going on next year, the year after that and the year after that. It's going to be a very competitive marketplace, one where we will have to work very hard to be successful, but one that is very important to our strategy, where we will invest to be successful in the future.

"So, let's talk about the specific strategy itself. The fundamentals of our strategy are based on the idea of choice and selection. It's our view that one model, one type of phone is not going to build volume into that critical mass that we think we need to make the business successful. We have people who are going to want QWERTY keyboards. We're going to have people who want touch keyboards. People are going to want a big screen, people who want small screens. People are going to make trade offs on battery life to be able to do media. People are going to want different configurations for the phone.

"So it's our view that we need to work closely with Samsung, LG, HTC, HP, Sony Ericsson, and others to build a broad selection of phones that really deliver choice, at different price points, with different functionality, and different capability. And as you can see, in the phones on the slide here that we will be delivering in October when Windows Mobile 6.5 comes to market, you can see some of the diversity, different sizes, different screen sizes, different approaches for input, etc. So, that's the fundamental pillar of our strategy.

"The second pillar of our strategy is around experiences. And if I have a critique of our phones today, it's that our experiences are very good in the business case. If you want to do e-mail, and Outlook, and connect to Exchange, and move data around in that environment, we're actually quite good. But, if you're in the consumer space, and you have consumer scenarios, you want to do more browsing, you want to do more media, you want to do more video, you want to do those types of things, our experiences aren't as rich as they need to be. And starting with 6.5 and then going forward, you're going to see us expand those experiences dramatically, and you're going to see us think about those more as end-to-end experiences where Microsoft makes sure that the experience works from start to finish.

"So, in 6.5, let's just pick an example, you'll see our browsing experience get dramatically better. So, you will have a very rich browsing experience on 6.5 devices that will give you access to more Web sites than you will be able to get to on an iPhone, that will work actively and work well. It really is a much better experience. We will have to continue to enhance that because the browser world is advancing very quickly. But, that's an experience people expect to work and that's just one example of many experiences that we're building to expand in that area, so choice in selection, great end-to-end experiences.

"The third thing we're going to focus on is what I talked about in our core strategy around three screens and cloud innovation. Cloud innovation is very important in the space because people are always connected with their phone, and they always want to be able to have access to other things, and the cloud is going to be able to provide those capabilities.

"The example in 6.5 is a new service we are providing called My Phone, which effectively enables you to back up your phone instantly through the cloud, enables you to transfer media from your phone to the cloud, and always have access to it. If you lose your phone, you haven't lost all your data. Not only have you not lost your data but the cloud can help you find your phone. So, there's a whole set of those types of services that we want to expand into, and I think those cloud-based services brought to the phone as well as to the PC and the TV are going to be quite powerful.

"Fourth element of the strategy is around the brand, and you will see on the slide it says Windows phones. We are going to invest and build on the brand of Windows phones. One of the challenges we have when we talk to consumers today is they see a Windows phone experience and they ask how do I get that and we haven't had something to call it where we'd say, oh, go into the store and ask for a Windows phone. And that's an area where we are going to invest in building. We will invest in that with our operators. We will invest in that with retail and we'll invest in it with our own advertising money to make sure people understand when they see those types of experiences that that's a Microsoft experience delivered on a Windows phone. It may come from HTC, it may come from Samsung, Sony-Ericsson, HP, others, but it's going to be a great experience, and they'll know what they're going to get.

"The final part of the strategy is we have to do a better job executing, and a better job in operating our business. I think there are two areas I would like to highlight. The first of those is in our integration with hardware manufacturers. If you're on a strategy that's about choice and selection, you have to do a great job integrating with the hardware because all these experiences are about all the hardware and the software interact, and then how that combination interacts with the cloud.

"And, to date, we haven't done as good a job as I would like in building the relationships and getting the right level of integration with our hardware OEMs. And so, you will see us investing in that. We have already started that process. Obviously phones take time to develop, so that won't happen overnight, but you're going to see a dramatic improvement in the integration between what we do in the software and what our hardware partners do on the hardware side.

"And then the second part of better execution is strengthening the team doing the work. And we have over the last 12 months done a significant investment from a people perspective, and I'm not talking about head count, I'm talking about quality talent, of moving quality talent onto the team. People who have built successful businesses in Exchange; people who build successful businesses in our mouse and keyboard division; people who build successful businesses as part of Windows; and moving them to Windows Mobile to make sure we have the best quality talent in the company working on this key initiative. And those people are now in place.

"Windows Mobile 6.5 shipped within four days of its original ship date when we sent it to the hardware manufacturers. That's a great performance in any market, and in a market where you are talking about phones, which is a very complicated release process, we are quite proud of that. And I think you're going to see as we go forward into the future, see our execution rhythm both pick up and the quality of that execution rhythm improve.

"So, that's the Windows Mobile strategy. It really is about choice and selection, and great experiences. Those experiences are going to include connectivity to the cloud, connectivity to the PC, and to other things, and it is going to be about building the brand and better execution."