With the rapidly evolving Windows Mobile ecosystem underway, what can Microsoft do to retain, woo, and attract developers to the changing platform? There are lots happening on and beneath the surface in Windows Mobile 6.5 and onward. With some devices not supporting physical hardware navigation, like directional pads and scroll wheels, developers must rethink how they design games and applications on Windows Phones such as the Diamond2 and the Toshiba TG01. Additionally, the 2009 HTC leak of forthcoming devices reveals a variety of screens and form factors that must be considered when a developer thinks about writing a program, adding to the complexity of the Windows Mobile landscape.

One thing is certain–mobile applications will be the selling point for future smartphones, highly popularized by the iPhone’s App Store. The iPhone platform has surpassed Windows Mobile in the number of available applications, with many copycats including Acer, a Windows Phone licensee looking to develop its own application store. Now that Redmond is courting developers in trying to meld hardware and software together seemlessly, what can the firm do to better serve the needs of users and developers? Read on to find out what we suggest and let us know in the comments what you want to see from Microsoft.

So what is Microsoft doing right? For one thing, a simple approval process and transparency has been announced; Apple has encountered some outrage with its stringent application approval processes, a painfully long process that makes no sense as a Twitter-based application was initially rejected due to inappropriate language that may be posted by Twitter users and not due to the application itself containing foul language. Microsoft is encouraging students to develop for the platform–tapping them into Windows Mobile early in their life; student developers have no fees to pay to submit applications, making it an attractive platform for young, creative talent. However, recent details of Microsoft’s mobile Marketplace outline that developers get to keep 70% of their revenues and pay a submission price for applications submitted to the Marketplace, causing some in the Windows Mobile community to be enraged with the fees, like those over at MobilitySite.

Upon closer look, the fees do make sense. For years, developers have been complaining about gouging and msmobiles has reported numerous times in the past that storefronts like Handango have been charging developers 40-50% of sales, compared to Microsoft’s proposed 30%. Moreover, Apple charges the same 30% for the iPhone apps and similar submission fees, and consumers and developers benefit due to the automatic updates being pushed out. If Microsoft can replicate this experience and incorporate updates and make use of their “Windows Update” on the phone, we may have a winner. Moreover, developers can get free publicity if they make the top ten list, like the iPhone App Store on iTunes, making their software more visible to an even greater audience.

Microsoft has been rallying support around Windows Mobile application development recently. The firm is readying its Mobile Incubation Week for developers. Microsoft has to be sensitive to long-time partners and developers that programs they may have developed (mostly in terms of gaming) for Windows Mobile 6.1 or earlier may not work with devices made with 6.5 in mind not because of any major code changes in the operating system, but in terms of hardware being offered. We’ve briefly examined the complexity of this issue before, noting that some phones do not support physical hardware navigation. Developers must now re-think of the interface, which will cost time, money, and probably some frustration.

But what can Microsoft do beyond Mobile Incubation Week? Well, according to our own contributing editor Anton Nagy, the firm can probably borrow some ideas from Google and HTC. The two firms have been strongly courting developers with the openness of the Android platform. HTC even offers an Android Dev Phone that is SIM-unlocked and gives developer an opportunity to flash various ROM images and radio versions to increase the compatibility of their applications. The unlocked Android Dev Phone is actually the T-Mobile G1 variant and costs $400 contract-free, making it a pretty sweet offer. Perhaps Microsoft can offer a developer’s discount on an unlocked, contract-free Touch Pro2 so developers can play around with games or applications that they have been coding, ensuring that the interface is useable sans directional pad.

On the application storefront known as Marketplace, Microsoft can help to promote works of quality submitted by developers, in effect giving developers free advertising and promotion. Titles that are popular and well-received can receive more prominent placing or promotion. This way, Microsoft can spur more quality title, rather than the iPhone’s plethora of “Pull My Finger” flatulence generators. Also, if developers are able to sell more applications as a result of Microsoft’s Marketplace, then perhaps the 30% fee can be negligle–think of it this way: 100% of a small number may still be a smaller revenue than 70% of a large number. Plus, if developers don’t have to manage pushing out the updates, and if the storefront can attract more customers, then a 30% “marketing and operations fee” isn’t such a big charge.

Pushing on the consumer boundary may be a bit tougher to overcome, but the iPhone has gain a lot of ground on this aspect from games to books and fun applications. If Microsoft wants Windows Phone to appeal to consumers and prosumers (and not just professionals, like enterprise users), then the firm needs to attract applications like Flickr, NY Times for news, and the gamut from games and cooking recipes to Yelp and restaurant pickers. Perhaps, maybe a dedicated pocketnow.com application so you don’t even need to hit Internet Explorer Mobile 6.

In summary, Microsoft can begin to rebuild the Windows Mobile ecosystem by offering seamless application updates on Windows Phone so users don’t have to worry about installers, offering developers free publicity to reward them for well-developed work that will attract the attention of users, and provide developers an incentive to develop on cutting-edge hardware by offering a developer’s discount for hardware to ensure that applications will work smoothly. In turn, Microsoft’s focus on developers will spur the user community. Users will receive high quality, relevant applications that are affordably priced (given that the sweet spot for apps on the iPhone store falls under $10).

So, developers, what can Microsoft do to keep you happy so that you can make me happy with all the consumer, productivity, and enterprise applications? There will be surely some hair pulling from gaming developers as HTC et al. decided to remove some navigation controls, but we’re confident that the Marketplace will help make up for it in the long-haul.

Special thanks to Anton for the story idea and Brandon for the the graphics.