Microsoft Clarifies AT&T Windows Phone Partnership

"Premier partner" was the description that David Christopher, chief marketing officer for AT&T Mobility and Customer Markets, used in a Tuesday press conference at the Mobile World Congress in Barcelona. In reality, all this really means is that AT&T, along with Orange, will get a head start on global carriers in bringing Windows Phone 7 Series devices to market.

"Microsoft didn't name AT&T or Orange a premier partner, so calling it that is inaccurate," a Microsoft spokesperson said Wednesday in an e-mail. "In fact, Microsoft is working with 20 partners globally to bring Windows Phone 7 Series phones to market. With AT&T and Orange, they are investing together to bring the full Windows Phone 7 Series experience to the market across a range of phones."

By virtue of this relationship, AT&T and Orange will gain first mover advantage and be able to distinguish their offerings from those of competitors.

"We're working with them side by side so that they can provide their differentiation through unique software and services on their networks," Andy Lees, senior vice president of Microsoft's Mobile Communications Business, said in a Tuesday press conference at MWC.

Microsoft will work with other carriers on differentiated services as well, but not right away, according to the Microsoft spokesperson.

This isn't the same kind of deal as the exclusive arrangement that AT&T has with Apple for iPhone distribution in the U.S., and Microsoft partners are actually relieved that this is the case.

Microsoft, given its struggles with Windows Mobile, simply can't afford to have the Windows Phone launch wave tarnished by network reliability issues. And while all carriers are facing a smartphone-induced bandwidth crunch, AT&T's image doesn't inspire confidence right now, especially after Consumer Reports ranked the carrier dead last in its latest customer satisfaction survey.

"Microsoft needs Windows Phone to be successful. Brand alone will not carry them, and they need the experience to be fantastic," says Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va-based solution provider.

Windows Mobile's market share has been steadily dwindling: According to Gartner's most recent market share figures, Windows Mobile accounted for just 7.9 percent, compared to 44.6 percent for Symbian, 20.8 percent for RIM, and 17.1 percent for the iPhone.

Michael Cocanower, president of Phoenix-based Microsoft solution provider ITSynergy, says this makes the AT&T Windows Phone partnership even harder to understand. "If you have a platform like Windows Mobile that's suffering in terms of market share, why you would choose one of the worst carriers to carry your flag in the market?" Cocanower says.

Although AT&T may seem a bizarre choice for Microsoft, the software giant's decision to give AT&T special Windows Phone 7 privileges starts to make sense when you look at the historical ties between the two companies.

Microsoft's and AT&T's mobile partnership began in 2003 when AT&T became the first U.S. carrier to launch Windows Mobile devices. AT&T also uses Microsoft's IPTV technology in its U-Verse triple play package. In fact, Microsoft last month came to AT&T's defense by suing Tivo for patent infringement, after the DVR maker had filed suit against AT&T on similar grounds.

It's certainly possible that Microsoft's choice of AT&T could end up being a strategically solid one when viewed through the lens of time. AT&T has pledged to spend between $18 billion and $19 billion on network upgrades this year, and this will probably help address issues in smartphone-saturated cities like New York and San Francisco.

But even if AT&T has trouble handling the bandwidth demands of Windows Phone 7 users, Microsoft's trailing position in the market means issues would impact a smaller number of users, according to Gary Berzack, CTO and COO of eTribeca LLC, a New York City-based wireless solution provider.

"I think there's going to be slow uptake on Windows Phones, and they're not going to have a significant impact on AT&T's network," says Berzack. "After all, Microsoft is still the smallest major player."