The Rise and Fall of Windows Mobile, Under Ballmer

Microsoft’s Windows Phone operating system is hardly as influential as its desktop counterpart. And now that Steven A. Ballmer has announced plans to retire, it is easy to point fingers at the Microsoft chief executive for the lackluster success the company has had in mobile computing.

But that would be an inaccurate recounting of the story. Mr. Ballmer took the helm at Microsoft in 2000, just as the company was preparing to enter the mobile business with Pocket PC 2002, the earliest version of Microsoft’s mobile software.

For several years, before Apple introduced an iPhone, Microsoft’s Windows Mobile software system was a dominant product in what was then a niche category, back when smartphones were still luxury devices for businesspeople who wanted a portable computing device that doubled as a phone.

“Microsoft was a natural company to step up and provide that service, and as a result it achieved significant market share, at least in the U.S.,” said Jan Dawson, a telecom analyst for Ovum. Microsoft’s market share peaked at about 60 percent in 2007, the year the iPhone was released, and BlackBerry took over the top spot shortly after (though BlackBerry later plummeted as well).

That’s not to say there weren’t missteps under Mr. Ballmer. Microsoft, like Nokia and BlackBerry, was slow to react to the new expectations created by the iPhone.

Unlike previous smartphones, the iPhone catered to everyday consumers. Its touch screen made it easy to use for both work and play, and eventually users could add apps and games to customize its capabilities however they wanted. That was a stark alternative to earlier smartphones with keyboards and styluses running Windows software.

Google, with its newer Android software, was quick to come out with a compelling, more “open” alternative to the iPhone â€" the G1 from HTC was the first handset to feature Android in 2008.

By contrast, Microsoft took longer to overhaul its Windows software system. It scrapped plans to do a minor upgrade for Windows Mobile and started fresh with Windows Phone 7, an operating system designed for touch-screen devices and capable of downloading third-party apps and games, similar to iPhones and Android phones.

The first phones with Windows Phone 7 hit the market in late 2010, but by then Apple’s iOS software and Google’s Android completely dominated the mobile market, giving little room for a relevant third player.

In 2011, Microsoft announced a big partnership with Nokia, in which the struggling Finnish handset maker agreed to ship most of its devices with Microsoft’s Windows Phone software.

But while Nokia’s Windows-powered Lumia devices have gained traction in some parts of the world, they haven’t done much for Microsoft. Windows Phone software runs on a mere 3.7 percent of smartphones worldwide, far behind Android, with 79.3 percent of the market, and iOS, with 13.2 percent, according to IDC.

As Mr. Ballmer looks toward the exit, he may regret his infamous words during a television interview with CNBC in January 2007, in reaction to Apple’s introduction of the iPhone.

“That is the most expensive phone in the world, and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good e-mail machine,” Mr. Ballmer said. “I kinda look at that and I say, well, I like our strategy. I like it a lot.”