At this point, I think it's safe to say that Windows Phone has not quite lived up to expectations. When we first heard mention of it, we were all ears and knew that both iOS and Android might have another legitimate competitor. And by all means, they still may. But if you were at Microsoft's final CES keynote (for now, anyway), you could hear it in Steve Ballmer's voice. He has full faith in both of their latest platforms, as he should; but his tone is different than it was last year. He's changed from a "We're going to wow the industry" attitude to "We can make this work."

The point being, I think we all expected Windows Phone to close out 2012 with more than 5.2% US smartphone market share.

That's not to say Windows Phone doesn't stand a chance. It does. It is great software and it's only improving with every update and extra partner OEM that joins the rest. But the hurdles Windows Phone is facing stretch beyond solely hardware and software like I've stated in the past.

At Nokia's CES press event, where the Lumia 900 was announced for AT&T here in the US, our own Aaron Baker asked Nokia CEO Stephen Elop, "From a retail perspective, how do you ensure that the Lumia 900 gets the same level of face time as competing platforms?" Elop answered that they (along with Microsoft and AT&T) are working hard to provide sales reps and other carrier employees with sufficient hands-on time, training material and the proper information needed to promote Windows Phone on a retail level.

The obstacles Windows Phone faces at retail stores, though, is not only a lack of knowledge or hands-on time. It's also a lack of differentiation. We're now over five years in on the iPhone and Android has been available to consumers for nearly three and a half years. By now, anyone who has been in the smartphone game for a year or more is likely invested in one specific platform, and in many cases, both. Windows Phone does little to entice people to stray away from their platform of choice. It lacks the differentiation and wow factor needed to do so single-handed.

What Microsoft needs is a game-changer, or something to get people to turn heads. The Lumia 900 isn't exactly a game-changer, but it is a fine piece of hardware, worthy of lots of attention. It's enough to make me want Windows Phone – which is saying something. But the 900, alone, will not be enough to turn Windows Phone around.

David of TmoNews and I have chatted about this on several accounts, especially during the Untethered Podcast. Time and Microsoft's willingness to keep fueling money into Windows Phone are what will ultimately play to the platform's advantage. However, that game-changer will eventually have to come. Continuing to coast on such a small percentage of market share is only going to hurt them.

What they need is an Xbox Phone.

To be fair, a gaming-centric phone has already been done. The PlayStation phone, better known as the Xperia Play, was one of the more highly anticipated phones of late 2010 and early 2011. However, when it finally hit, it flopped pretty hard. It would be easy to assume that Microsoft's endeavor in the same field would yield a similar result, but let's consider a few things first:

  • As of yet, Sony Ericsson has failed to execute an overly popular Xperia phone in the States
  • Xbox is an in-house service created by Microsoft and will ultimately be part of a unified experience, unlike the PlayStation, which is a Sony product and far less related to Android
  • Mobile gaming is on a sharp rise
  • The Xperia Play was underpowered and over-hyped
  • Windows Phone is at a turning point with Mango, Nokia hardware and a new marketing push
  • There is already some native integration with Xbox LIVE and LIVE Companion app

There is a lot playing to Microsoft's advantage at the moment. For instance, they managed to steal the show at CES this year, despite over 15 announced Android phones. And this new marketing push and a few new partnerships should help bring them out of the dimly lit corner of retail stores and further into the limelight.

But with as big of a following as Microsoft's Xbox LIVE service has, they're currently missing a huge opportunity by not putting more attention on the integration and future possibilities with Windows Phone. I would love nothing more than to see a Nokia- or HTC-made Xbox Phone. It's a pair of services that have been begging for a closer relationship from the start. As Windows Phone gains multi-core architecture support and the capabilities of handsets expand, Microsoft will find themselves sitting on a mobile gaming gold mine. Dedicated handsets are quickly falling off the map as people would prefer to carry a single device that does it all, and Microsoft is currently the only one who has yet to really enter that space and has mobile software and a gaming platform under one roof.

It all makes sense to me, and I've been wondering from day one why Microsoft has not been focusing more on bringing the two services closer together. An Xbox Phone has been staring them in the face for quite some time now. It's what both what users want and Windows Phone needs: consolidation of hardware and services, better mobile gaming and a true differentiator.

Tell me, mobile gamers. Is an Xbox Phone what you've been waiting for? Who would you want to see make the first Xbox Phone? Was it Xbox LIVE integration that made you switch to Windows Phone in the first place?


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