Verizon Wireless will carry Windows Phone 8 devices this year, in a major break from the carrier's overall coolness towards all things Microsoft. This could well be the jumpstart that Microsoft's struggling smartphone operating system needs.
Bloomberg reports that Verizon Wireless will sell a Nokia Windows 8 smartphone later this year. That's a very big deal for Microsoft, because Verizon is the U.S.'s largest carrier, and the relationship between Microsoft and Verizon has been somewhat rocky over the last few years.
The last time that Verizon sold a new Windows Phone was more than a year ago, back in May, 2011. The phone, the HTC Trophy, sold poorly. That was the second time in the last few years that Verizon was burned by selling a Microsoft phone. Back in 2010, Verizon sold Microsoft's ill-fated Kin, the worst phone ever released. Two months after the Kin's release, Microsoft killed it.
This time around, both Verizon and Microsoft are hoping for a different outcome. For Microsoft, the benefits are obvious: Getting the U.S.'s largest carrier to sell its phones at a time when there's a big overall push for Windows 8 could lead to a significant gain in market share. Verizon has a great deal to gain as well -- notably a weapon to wield against the high royalties and subsidies Apple gets for iPhones.
Unlike the last time around, expect Verizon to push this latest Windows Phone heavily. Verizon has been worried about its heavy dependence on the iPhone and Android phones, and especially on the iPhone. iPhones gets subsidies from Verizon and other carriers to lure people to sign up for long-term contracts. In addition, Apple gets revenue royalties for every iPhone user. Computerworld reports that Apple gets up to $600 in royalties from carriers for each iPhone user, and that's on top of getting hardware sales subsidized by carriers.
Verizon needs some way to push back against Apple for those high royalties, and Windows Phone is one way to do it. Yankee Group analyst Katie Lewis wrote in her blog earlier this year:
"Mobile operators are sick of taking orders from Apple...iPhones are occupying an increasingly dangerous share of mobile operators' smartphone sales...The success of the third mobile ecosystem [Windows Phone] would put control over the U.S. smartphone market back into the hands of mobile operators -- backing Windows Phone is AT&T and Verizon’s chosen method of self-preservation."
Because of that, I expect Windows Phone sales may start to become serious later this year, with the release of Windows Phone 8, and Verizon's push. Windows Phone sales have picked up recently, with big percentage gains. IDC reports that in the second quarter, Windows Phone sales surged by 115% compared to a year ago. Canalys said that sales jumped even more, by 277%. But Windows Phone still has an anemic small market share -- 3.5% according to IDC, and 3.2% according to Canalys.
Still, you have to start somewhere. If Verizon pushes Windows Phone 8 as much as I expect it to, Windows Phone could eventually become a true smartphone competitor.