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Early reports indicate that the Nokia Microsoft is paying dividends, with nearly half of all second-generation Windows Phone 7 handsets sold being by the Finnish handset manufacturer.

Unpacking the WP7 marketshare

The report comes courtesy of WMPoweruser, who used data gleaned from OccasionalGamer’s game collection. On Nokia, they write: ‘Even at this early stage the company already has 45 percent of the second generation handset market, with most of that being the Nokia Lumia 800 and some the more recently introduced Nokia Lumia 710.’ Next in line? HTC with 40 percent market share, but that is down quite drastically from the 55 percent market share the company had prior to Nokia’s arrival.’

How much is the base growing?

The fact that Nokia has managed to race to almost half of all sales of the second-generation handsets so quickly is notable, but there are a few important qualifiers to consider. If that growth is at the expense of other WP7 handset vendors, as opposed to growing the whole sales base of WP7 handsets, than this is not an ideal situation for the Nokia Microsoft partnership.

Why? Well, Microsoft wants to compete with Android and iOS, and for that to happen, the company’s mobile OS has to grow in volume. What each vendor has of a non- or slow-growing base of WP7 handsets is, for all intents, immaterial. Nokia, on the other hand, wants to compete with the likes of Apple, Samsung and HTC, and for that to happen, need consumer acceptance of Windows Phone 7 and overall sales of that mobile OS platform to explode.

What will follow?

Windows Phone 7 say that they ‘suspect if market acceptance for Windows Phone 7 increases it may be because it becomes strongly associated with Nokia, which may mean this percentage could easily increase to 60-70% or more,’ while some users comment that the market will grow because of Nokia, but other OEMs will become attracted to WP7 as a result. Whichever it is, the Nokia Microsoft partnership has very quickly become mission critical – as many suspected it would – if WP7 is to succeed in the long run.

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Jerry Yang, Yahoo’s co-founder, former CEO, and long-term board member, has stepped down. He leaves the company during a period of protracted turmoil following the departure of CEO Carol Bartz and strained relations with the company’s very important (and lucrative) Asian wing.

Sudden decision

Though Jerry Yang has been under significant pressure for sometime with many calling for his departure, Kara Swisher of AllThingsD reports that the eventual decision to leave was both a sudden one and Yang’s own. She writes the departure ‘was so sudden, in fact, that Yahoo’s key execs — including its communications arm — had only a few minutes heads up to what is arguably one of the more momentous events in the history of the Silicon Valley Internet giant.’

The dotcom survivor

Under Yang’s tenure at the company, Yahoo went from being one of the few 1990s startup to survive the dotcom bubble bursting, to becoming of the biggest media properties in the world. Even though he created exceptional wealth for himself and Yahoo’s investors, the hardships for Yahoo – and by extension Yang – can be traced back to several key events over the past decade. Once Google – a company Yahoo nearly purchased – eclipsed it as the pre-eminent search giant, Yahoo’s stature, while still massive, began to decline and would never ascend again.

Yang’s Microsoft moment

In 2005, during Yang’s tenure as CEO, Yahoo made the now frequently criticised decision to reject Microsoft’s unsolicited bid to takeover the company for $44.6 billion. For perspective on the magnitude of that decision, the media conglomerate’s market cap as at the time of writing sits at $19.14 billion.

Since then, Yahoo has struggled to compete, losing leadership and executives along the way, making a lesser agreement with Microsoft and falling further and further behind as new mega internet properties like Facebook rose to compete with titans like Google, Microsoft and Apple.

On many accounts, the only thing that kept Yahoo financially attractive to investors was its stake in Alibaba, a mega Asian internet property. That relationship, too, has come under strain in recent months, piling even further pressure on co-founder Jerry Yang.

Better days ahead?

Swisher concludes her piece on how Yang came to leave, writing: ‘With a new CEO in place and the possible chance that its Asian problems were moving in the right direction, it had to have sunk in for Yang that it had finally become time to make peace with the present by abandoning his future at Yahoo.’ That seems a fair appraisal of what may have happened here.

Nevertheless Yahoo co-founder Jerry Yang remains one of the most important Internet pioneers of all time, and it will be interesting to see how the company charts its path without his legacy weighing on Yahoo anymore.

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Comet Group, the second largest retailer of electronics in the UK, has been sued by Microsoft Corp for allegedly selling counterfeit copies of Windows Vista and XP discs.

Mass piracy?

On its website Microsoft alleges that the retailer had created more than 94,000 sets of Windows Vista and XP recovery CDs, which it then sold to customers who were purchasing PCs and laptops that had Windows loaded, reports Reuters.

Reuters reports that: ‘Comet is owned by French retail conglomerate Kesa Electricals but is in the process of being sold to private equity group OpCapita. A Kesa spokesman told Reuters that Comet was providing the disks as a service to its customers.’ Reuters says that the spokesperson explained that consumers who were purchasing PCs or laptops were able to create their own recovery CDs, and many of them did not, leading to them facing problems when their PCs failed. Comet Group was, presumably, helping them circumvent this problem.

Just providing a service

The spokesperson further explained that Microsoft itself used to provide the recovery discs, but stopped doing so in 2007. Moreover, the group believes it was acting in the best interest of its customers, saying that it ‘has a good sense of its claim and will defend its position vigorously’.

Investors, however, don’t seem impressed, with Kesa shares dropping some 5 percent during trading on Wednesday. The whole case screams of absurd, though. One would think that Comet Group would explore all of its legal options before just burning and retailing software created by Microsoft without Microsoft seeing a single piece of that revenue. This is especially so given how vigorously Microsoft protects its properties. Just ask Google and its partners.

It will be interesting watching whether a court even gives the Comet Group an opportunity to defend itself, or if this will be thrown out as soon as it comes under legal review. Strange, strange case.

Photo: Facebook

A few hours after the Facebook Messenger application for Windows leaked into the wild, the social network released the application officially. It’s yet another step in Facebook’s many initiatives to keep users constantly engaged with its platform.

So what’s in the box?

While Facebook Messenger for various mobile devices has been released, this is the first desktop client. Emil Protalinski over at Cnet reports that: ‘The application, which requires Windows 7, provides access to three main Facebook features: Facebook chat, the new Ticker feed, and notifications. In addition to Windows 7, Facebook Messenger is also already available for Android, iPhone and BlackBerry.’

Facebook has reportedly hinted at new Windows-specific features in the work, added Protalinski, including: ‘chatting with multiple friends, video calling, limiting chat availability, and editing settings. It’s not clear if the company will be making announcements for every new version or if they will be just quietly released like this first version.’

The new white pages

With over 800 million users, Facebook has a very large percentage of the internet using population on the social network. As such, the messaging component of its platform is, by extension, the biggest in the world. Way bigger than AIM, way bigger than MSN, and bigger than even Gmail.

While Facebook Messenger is far from the biggest component of the social network’s offering, the engineering team is increasingly leveraging its user base by offering them features they may use on different platforms. As such, this one component alone is competing with aforementioned desktop services like the ones mentioned above, as well as mobile messaging platforms like the WhatsApps and BBMs of the world.

The large userbase, coupled with the various engagement tools Facebook provides – both realtime and asynchronous – effectively makes the social network the new white pages. If anything, that’s an interesting way of thinking of how powerful the platform has become, and how it could claw its hooks into society deeper still.

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Charlie Kindel, a former Windows Phone GM, wrote a post explaining the reasons he believed were behind Windows Phone 7’s continued struggles in sales even though – according to him – it was a superior platform to Google’s mobile OS. He says it all comes down to control – and that is what has limited WP7’s sales potential to date.

Kindel’s reasoning

Kindel explains that there are four primary sides of the mobile market – the users, the OS providers, the device manufacturers and the mobile carriers. He explains that they all own and control different parts of the market, while in conflict in other parts. He explains that where Google gives the device manufacturer and the carrier control – leading to more Android devices being made and carrier retail sales people punting Android phones – Microsoft restricts this control, meaning manufacturers and carriers support it less. In turn users do not have the devices marketed to them by the carriers, hence Microsoft’s week sales position.

What this means

Charlie Kindel explains that this means that Windows Phone 7 is able to provide a superior end user experience, though it comes with a price. ‘This is why, despite being a superior PRODUCT to Android, Windows Phone has not sold as well.  Spending marketing dollars on advertising Android devices is and easy decision for the carriers. Pushing RSPs to push Android is easy,’ he writes.

In the long run, he believes this model – putting users first – could trump over Google’s ‘do what you will approach’, which he says has resulted in the platform becoming extremely fragmented.

A comeback unlikely?

Tech writer turned venture capitalist MG Siegler says that, even if WP7 is marginally better than Android or iOS, it’s not enough, especially given how late to market it is. ‘Two to three years in the hole, the only way Windows Phone can win the market now is to make a product that is leaps and bounds better than what’s out there. They need something that’s an iPhone-in-2007 type product. The product they have, while good, isn’t that,’ Siegler writes.

The Windows Phone 7 sales problem has been on my mind for some time now. The mobile OS platform is, in my view, at least on par with Google’s Android, if not superior. What’s for certain is Android OS isn’t manifold better warranting the major sales gap between the two platforms. So what then is Microsoft to do to mitigate their current sales problem?

Kindel does a good job outlining how, in simple terms, the mobile devices market is structured. His argument for Windows Phone 7 sales issues is well articulated, but the proactive steps the WP7 team need to take to kick start sales outside of throwing money at the problem and waiting is not explained at all.

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Research in Motion’s market cap has dropped to just $6.8 billion, which is less than what Microsoft paid for Skype when it purchased the VoIP company for $8.5 billion this year. As the pressure mounts upon the company, the CEOs have cut their salaries to almost nothing.

CEOs take a knock

Research In Motion’s co-CEOs, Mike Lazaridis and Jim Balsillie, cut their salaries to just $1 per year during the company’s most recent earnings call. Even with that cut, the press around RIM’s leaders ranges from scepticism to downright cynicism. Reporting on the salary cut, CNet’s Larry Dignan writes: ‘Nevertheless, RIM carries on with its current management. Co-CEOs James Balsillie and Mike Lazaridis are taking $1 in salary a year. This token gesture inspires instant cynicism. The two may only be worth $1 a year at this point. You get what you pay for.’

Investors making suggestions

Activist investors Jaguar Financial, who for the last few months have been calling for a shakeup at Research In Motion, have also weighed in, recommending that the company ditch its handset business entirely and rather monetize its high-margin services business. ‘Jaguar believes that the road map to value restoration lies in a sale of RIM whether as a whole or in separate parts,’ Reuters reports.

The problem with this thinking, of course, is Research In Motion’s entire service business is built atop sales of its BlackBerry handsets – in many ways they are one and the same – the one exists to augment the other.

Now what?

The fact that Microsoft paid more for Skype than Research In Motion is currently valued at is very symbolic. 2011 has been a torrid year for the Canadian smartphone company, and if 2012 gets off to a similar start, the long-term viability of Research In Motion will be called into question.

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While naysayers claim – seemingly legitimately – that smartphone sales are eating into those of handheld consoles, it’s certainly inconclusive that social gaming is upending the home console market if the Xbox’s recent achievement is anything to go by. Microsoft announced that their popular home console had its best sales week ever, moving nearly one million units in Black Friday week in the US.

Microsoft announced the news on its official blog, writing: ‘Entering the seventh year of its lifecycle, Xbox 360 just closed the biggest sales week in the history of the hit digital entertainment system, selling more than 960,000 consoles in the U.S. during the week of Black Friday.’ Colossal.

Black Friday mania

What’s even more incredible than selling just shy of one million consoles is the number of consoles Microsoft sold over the 24-hour period spanning Black Friday. Get this – the company moved an incredible 800,000 units in the US in just 24 hours. Black Friday is characterized by heavy discounts, with US shoppers flocking to stores in their millions, often leading to lengthy queues, jams and, occasionally, strange incidents. A woman in the US was recently arrested for pepper spraying other shoppers just to get her hands on an Xbox 360 ahead of other shoppers. Really.

Kinect joins in on the fun

Not only did the Xbox 360 home console sell well, Microsoft was also selling Kinect sensors and Kinect bundles hand over fist. The company announced that they had sold more than 750,000 Kinect devices – bundled or otherwise – in the same week.

In short, Microsoft’s Xbox business is soaring while Nintendo’s console business sputters and Sony’s business hums along. The threat games like FarmVille and the like pose may be overstated – though legitimate – but for now, Microsoft will just bask in its victory.

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Comedian Louis C.K. told Forbes that the next technology pioneer would be female. While his reasoning is typical C.K. comedy, there is plenty of merit to the sentiment, and to be frank, it would be good for the technology industry.

Totally be a chick

Speaking to Fast Company’s Nancy Miller, Louis C.K. explained that the world is transforming, and that women have more opportunities than ever before, even though there are still challenges. He says: ‘The next Steve Jobs will totally be a chick, because girls are No. 2 – and No. 2 always wins in America. Apple was a No. 2 company for years, and Apple embodies a lot of what have been defined as feminine traits: an emphasis on intuitive design, intellect, a strong sense of creativity, and that striving to always make the greatest version of something.’

Men are like Microsoft

He prefaced that statement by saying that the world loves underdogs, and women are the underdog in this situation. Unsurprisingly, comedian Louis C.K. didn’t think as highly of men – and he clearly doesn’t think highly of the house Bill Gates built, neither. He says: ‘Traditionally, men are more like Microsoft, where they’ll just make a fake version of what that chick made, then beat the shit out of her and try to intimidate everybody into using their product.’ Ouch.

It’s time

Ironically, C.K.’s sentiment comes at a time when a massive debate has broken out in Silicon Valley – the epicentre of the tech world – about whether the Valley is a pure meritocracy or if minorities have a harder time making it there than the usual suspects, namely white males. Having said that, though, the CEO of HP and the CEO of IBM are both females, and these are two of the biggest technology companies in the world. Perhaps comedian Louis C.K. is not all that prophetic, and is just calling a trend that’s already in motion.

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The Nokia Windows Phone 7 handsets that are under pressure to save both Nokia’s handset business and Microsoft’s mobile OS platform have gotten off to a slow start, if a recent report by an analyst is anything to go by. Pacific Crest analyst James Faucette has slashed his estimations of how many of the handsets could sell by 75 per cent.

A quarter of what was initially expected

In a note to clients, Faucette writes that [via Forbes]: ‘We believe that shipments of Nokia’s new Windows Phone 7 products have been lower than we had previously anticipated.’ He continued, saying: ‘We had expected that the company could ship as many as 2 million units into the six targeted markets for the holidays; however, we now believe that those shipments are likely to be less than 1 million for the quarter.’

Faucette believes that Nokia’s handsets could sell as few as 500,000 units, a mere 25 per cent of the total initially predicted.

Some perspective

On one level, the poor performance predicted by Pacific Crest analyst James Faucette could be seen as cause for concern for Nokia, and on another level, it could be nothing. Remember, the two million units figure was his estimate, and not Nokia’s. What’s more the Nokia Windows Phone 7 handsets are new to market and represent a comeback for the Finnish mobile phones giant – and something of an ‘arrival’ for Microsoft’s WP7 mobile OS – and so slow sales in the early going aren’t necessarily a bad thing.

Nevertheless, you can bet that both Microsoft and Nokia are keeping a nervous eye on Nokia Windows Phone 7 sales. Both companies need this to come off, and the longer it takes to gain momentum, the more anxious both parties will be, justified or unjustified.

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Windows Phone 7 has stuttered, and some believe that iOS and, in particular, Android are too far off in the distance for Microsoft’s mobile OS platform to catch up. Some disagree, and think that the struggling mobile OS platform may still have a chance yet to make a dent in the market.

What Microsoft has to do to win

Writing for PC World, Tony Bradley suggests that the reliance on Microsoft’s external services as is the case for other mobile OS platforms also represents Windows Phone 7’s opportunity to make a comeback.

He writes: ‘The goal of Windows Phone 7 isn’t to be the only mobile OS capable of connecting to and working with the vast Microsoft ecosystem. The goal of Windows Phone 7 is to do so better – to integrate more seamlessly and deliver a superior experience that gives customers incentive to want to use Windows Phone 7.’ He argues that Microsoft has achieved this, and with a mobile OS that does not parrot iOS.

Microsoft’s challenges

However, with that said, why then is Microsoft still struggling to close the gap? Bradley argues that ‘The Achilles heel of Windows Phone 7 is Microsoft’s dedication to a Microsoft-centric world.’ He says Microsoft needs to keep its platform open, ‘both allowing for other mobile platforms to seamlessly connect with the Microsoft infrastructure, and enabling Windows Phone 7 to easily connect and work with other systems.’

Our thoughts

Windows Phone 7 is in a precarious position because, truth be told, it’s a very good – and surprisingly unique – mobile OS platform. I tend to agree with this. Some even argue that it is notably superior to Google Android. The problem is in business, sales are what counts – and not the perception of just a few. If Microsoft is to close the gap, and if Microsoft is to make Windows Phone 7 anywhere near the success they need it to be, they’re probably going to need the response to the Nokia Windows Phone 7 handsets to be really good, work hard with carriers to get them to put the devices front and centre, and foster a community of serious evangelists.

They’re trying, but whether they’re succeeding remains to be seen.