Hi, I'm an iPhone and You're Nobody

Uh-Oh. Apple will almost certainly wipe up Microsoft in smartphone operating system market share during third quarter.

That's my conclusion after further reviewing Gartner's smartphone OS shipment numbers for first and second quarters. Sorry, I should have figured this all out earlier in the day.

Some background: Yesterday, I couldn't get to Nokia's announcement about licensing Exchange ActiveSync for Symbian S60 handsets. I instead posted to Apple Watch on new iPod colors (the one new feature) and iTunes 8's sales pushiness. Overnight, I asked Gartner for mobile OS shipments so I could write an analysis on the Nokia-Microsoft deal. Afterwards, I dug further into the numbers for an Apple Watch post on iPhone OS market share. While writing that post, I realized Windows Mobile's plight, and its dire.

By even the most conservative of analyst estimates about third-quarter iPhone shipments, Apple's OS almost certainly will push aside Windows Mobile in smartphone operating system marketshare. The smartphone is Windows Mobile's core market.

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During first half 2008, Microsoft shipped about 7.6 million copies of Windows Mobile. Smartphone OS marketshare was about 12 percent for each of the first two quarters. Gartner's second quarter numbers combined with Apple's disclosed iPhone shipments for first quarter equals about 2.6 million units for the first half. That's a little less than half the Linux total.

Looking ahead, iPhone OS could easily pass Windows Mobile, assuming Microsoft ships about the same number of copies in each of the previous two quarters&151;3.8 million. My guess: Windows Mobile shipments will decline to as few as 3 million. There are a bunch of exciting new Windows Mobile handsets coming to market, but the emphasis is on coming. For example, the HTC Touch Diamond and HTC Touch Pro are coming to Sprint here in the United States—next week and late October, respectively. Sony's Xperia X-1 launches on Sept. 30, which isn't soon enough for Microsoft.

Windows Mobile could have an exciting fourth quarter, but there's not much bang going on in third quarter. By contrast, Apple launched one of the most highly anticipated smartphones ever on July 11. Financial analyst estimates range anywhere from 4.4 million to 6 million iPhones shipped in third quarter. Either number would likely push Microsoft down a spot behind Apple. How strange if the top three providers of Exchange syncing, based on smartphone OS shipments, were companies other than Microsoft.

The reversal of fortune would be perhaps a psychological blow to some Microsoft Windows Mobile product managers and one big smiley face for Apple's iPhone team. More importantly, it's news Apple could seize for competitive marketing purposes. Then there will be the jibes from the Apple fanboy bloggers. After all, Microsoft CEO Steve Ballmer made fun of iPhone in interviews last year. Which Steve will be laughing now, Microsoft's Ballmer or Apple's Jobs?

Windows Mobile's sudden, uncertain future is more reason for Microsoft to start a mobile Manhattan Project. Mobile devices are the future of computing. Microsoft cannot afford to cede anything to Apple—or to Google, which is rapidly preparing for Android's release. The mobile operating system is suddenly getting crowded. Microsoft once worried about Linux, Palm OS and RIM. But Apple is gaining fast, and Google will further fragment the smartphone OS market. Microsoft cannot continue in business-as-usual mode. Somebody needs to yell fire, then light one under every butt that doesn't move. It's time for a project with the urgency of Internet Explorer 2, 3 and 4 during the browser wars with Netscape.

Microsoft executives harp on about choice. That's fine if businesses or consumers choose your product. The local supermarket offers lots of choice, but I can walk to the pricier convenience store. The point: Choice is good but it's not a market differentiator. People need good choices, and Windows Mobile doesn't feel like one of them right now.

Some strong advice to Microsoft's executive team: If you lose the mobile market you lose the future of computing, particularly as emerging markets skip over PCs to cell phones and cheap laptops (many of which won't run Windows Vista). Here, let me scare you with this future iPhone commercial. It's in the guise of Apple's "Get a Mac" commercials but even more condescending. "Hi, I'm an iPhone—and you're nobody."