This month will witness the biggest change in Israel’s smartphone market since the launch of the iPhone here in 2009.
Three important smartphone manufacturers – HTC Corporation, Samsung Electronics and Nokia – announced that in mid-November they will introduce new smartphone models in Israel based on Microsoft's cellphone operating system Windows Phone 8. Until now, Windows Phone has been completely absent from the Israeli cellphone market. Earlier versions of the operating system were never launched here, primarily because they didn't support Hebrew.
Windows Phone 8 is an impressive, fast and intuitive operating system. At technology conferences held abroad, Microsoft demonstrated its unrivaled speed in performing routine actions, like snapping photographs. Windows' “Live Tiles” interface is at least as easy to use as Google’s Android and Apple’s iOS operating systems.
Windows Phone 8 will receive a strong push in Israel from several different market players: Microsoft Israel, the three largest cellphone operators (Partner Communications, Pelephone and Cellcom) and major cellphone importers (Suny Electronic, the Israeli importer of Samsung phone, Eurocom Cellular Communications, the local importer for Nokia, and Touch Group, the local importer for HTC). The question remains: Will these forces allow Microsoft to break the familiar duopoly of Apple’s iPhone with its iOs operating system and Samsung’s Galaxy with Google’s Andriod operating system?
Microsoft’s old operating system, Windows Mobile, didn’t fit into the world of touchscreen cellphones and app stores. The company regained its footing with the more up-to-date Windows Phone 7 operating system, which it presented at the Mobile World Conference in Barcelona in February 2010. Exactly a year later, it announced it was forming a strategic partnership with Nokia whereby the cellphone maker would use Windows Phone 7 on all its smartphones. Licensing agreements with other cellphone makers, like HTC and Samsung, followed.
But Windows Phone 7 never managed to make a significant dent in the world of smartphones. The market research company International Data Corporations found that in the second quarter of 2012, Windows Phone 7 had just 3.5 percent of the smartphone-operating-system market.
Most analysts agree that Windows Phone 8 is Microsoft’s last chance to become a player in mobile devices. And the company appears prepared to do whatever it takes to get in the game. Windows Phone 8’s trump card is the universality of its interface, which is almost identical to the Windows 8 operating system for PCs and tablets.
"The new operating system brings a computer everywhere, says Eyal Almog, Head of Business Development and Product Marketing at Touch Group. “It's the same interface, so it's easy to get used to it. The main advantage for business customers is its ability to interface with Microsoft Exchange and Microsoft Office software suites. That’s why some people are saying these Window Phone devices will replace Research In Motion, the maker of the Blackberry, as the quintessential maker of corporate mobile devices.
David Piamenta, CEO of local Samsung Electronics importer Suny, agreed that Windows Phone 8 would at least initially target business customers.
"We already have orders from several corporations for the Ativ S [smartphone] and from their perspective it’s almost a necessity,” says Piamenta. “At the level of the individual consumer, there are those who will love the Windows Phone, but in the area of apps it is still not quite fully developed."
He says the price of the phone has yet to be determined, but because of Microsoft's high hardware demands, it will be a premium device."
For Samsung and HTC, launching Windows-based smartphones will just expand their offerings, but for Nokia and its Israeli importer, Eurocom, it‘s a do-or-die moment. This December and January, Eurocom will launch two Windows Phone-based smartphones in Israel, the Lumia 820 and the Lumia 920. The company is in discussions with Israel's major cellphone operators and appears poised to launch its 920 model with Pelephone.
Meet the contestants
The Lumia 920 is an impressive attempt by the Finnish cellphone manufacturer Nokia to catapult itself back into the top five smartphone manufactures (having fallen out of such elite company according to Interdisciplinary Center data from the third quarter of 2012). The phone’s design is similar to other smartphone models Nokia has introduced in the last two years, with a colored, plastic polycarbonate body and a curved screen.
The Taiwanese manufacturer HTC's Windows Phone 8X model takes its name from the phone's operating system, and appears to be an effort by Microsoft to compensate for its clear preference for Nokia phones. HTC's phone appears similar to Nokia's offering, but HTC has distinguished its phone with a relatively low price.
Samsung's Ativ S is the only flagship phones that won't be launched as part of a joint event with Microsoft. It appears that Microsoft is confident in its ability to sell millions of units of its operating system without the help of the hardware giant. The Ativ (whose name is the backwards spelling of the Latin word, vita, meaning “life”) has a grayer, more serious appearance, with a metallic body that is thinner and lighter than its competitors.
Despite the impressive catalog of smartphones to accommodate it, Windows Phone 8 is far from a sure thing in Israel. One hurdle is the generally conservative nature of Israeli consumers.
Microsoft plans to overcome this obstacle by launching a broad advertising campaign for the new smartphones in cooperation with local importers and cellphone operators. It appears that Cellcom will carry HTC's phone, Pelephone will carry Samsung and Nokia's phones, and Partner will carry Samsung and HTC phones.
Over the long-term, Israel's major cellphone operators will only push Windows-based smartphones over others if they offer some sort of competitive advantage, like profitability, lower maintenance costs or fewer calls to customer service. Moreover, an increasing number of people are buying cellphones from sources other than the major operators, meaning the fate of the Windows Phone 8 ultimately rests with the consumer.
An appetite for apps
Smartphones today are not just compared in terms of their operating systems but also, and perhaps mainly, by the number of apps they offer for download. In this area, Microsoft's operating system is getting a late start and lags behind it competitors. The Windows Phone Marketplace offers some 120,000 apps, compared to 700,000 at Apple's App Store and 675,000 at Google's app store.
Microsoft is aggressively working to bridge this app gap, throwing money at wooing app developers and undertaking cooperative ventures. Microsoft has made sure its smartphones will include unique versions of popular apps, like the game Angry Birds and the music service Pandora. At the launch event for Windows Phone 8 last week, the company promised its smartphones will offer 46 of the 50 most popular apps that appear on its competitors' phones.
In addition, Microsoft is providing features that aren't part of the operating system itself, free of charge. It recently developed its own streaming music service called Xbox Music and a news service, which is supposed to replace the previous one, Zune Pass. The programs will be included on all the company's devices, including Windows 8 compatible computers, Xbox video game consoles and Windows Phone 8-based smartphones. Using the SmartGlass app, users will be able to start watching movies, listening to songs or playing games with one device and continue where they left off on another.
Microsoft executives hope the unified user environment will encourage consumers who have purchased one of Microsoft's electronic devices to consider purchasing the rest of them as well.
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