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A Microsoft-Branded Windows Phone: One Bad Idea that May Be Necessary

Microsoft (MSFT) Windows Phone 7 was supposed to put the company back into the mobile game. So far, it's done anything but. Hardware problems, complaining third-party developers, and sluggish sales have prompted deep price discounting to get things moving.

Handsets running Windows Phone 7 aren't getting traction. This is exactly what CEO Steve Ballmer didn't want to hear. It's the sales equivalent of a lump of coal in his Christmas stocking. As the old saying goes, desperate times call for desperate measures. For Microsoft, that may mean its own branded handset sporting a combination of hardware and design that will at least give Windows Phone a fighting chance.

The problem signs for the new operating system have been many:

Can you say disaster? My initial thought was that the problem has been largely a set of opportunistic vendors. I can imagine the conversation.
Microsoft:: We would like you to sell some phones that run Windows Phone 7.
Vendor: Oh. Ahh ... (looks at calendar) ... I think we're a bit booked--
Microsoft: We're planning to spend $500 million on marketing.
Vendor: ... but, for you, of course we could move some things around.
(Microsoft leaves.)
Vendor: (on intercom) Smedly, you know those phones that we over-produced? I think I know what we can do with them.
Then I read this view from UK mobile phone seller MobilesPlease that drove the point home:
The windows phone 7 handsets -as nice as they are â€" are by and large generic phones from well known manufacturers, and in most cases an almost identical model is available from the same manufacturer with Android, and given the choice people seem to be picking Android.
When a handset manufacturer hears about a big marketing push, it knows that carriers will pick up and take notice, and it wants to ride that wave and move product. That's it. None of the vendors have any particular impetus to help put Microsoft into a respectable position on the mobile front.

But that's exactly what Microsoft has needed here: partners that will do their best to create products you couldn't find any other way or from anyone else. And that's why I think Microsoft must come out with its own branded phone.

In February, I called such a notion a huge mistake because of the inherent competition with Microsoft's own manufacturing customers. However, what more could go wrong at this point? Vendors are putting Windows Phone on me-too products, and that will kill the critical mobile market deader than an old copy of MS-DOS.

Sure, the Kin did terribly, although it is about to make a reappearance at Verizon (VZ). But either Microsoft has to do things itself or find a way to work with just one or two partners who can and will do the innovative design work to make products that will shine. It's desperation time in Redmond, Washington.

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