It’s hard to believe that just six years ago, Microsoft completely dominated the mobile space. Two of the top three smartphones in 2006 were powered by Windows Mobile, and it was the must-have platform for power users and enterprise users alike. Yet by 2010, Redmond had totally lost its grip on the portable computing industry, with iPhones and Android-powered devices having emerged to pummel its market share. How did a company so successful at maintaining a near-monopoly on the desktop fall from grace in smartphones?

For a (relatively) long time, there were only three players of note in the so-called converged devices category in the US: Microsoft, Palm, and RIM. Almost everyone who wanted a pocketable computer that was greatly extensible in both hardware and software settled on either a Windows Mobile-, Palm OS-, or BlackBerry-powered device. And because Windows Mobile had the largest software catalog and the most powerful components in its PDAs and phones, it naturally rose to the top of the pile for the discriminating user.

Flash forward to 2010. The iPhone has taken the market by storm, forever altering the mobile landscape and the features demanded by consumers. While Android did well in emulating popular iPhone features from the outset, Windows Mobile was slow to adapt; for instance, its stylus-mandatory UI made the much more finger-friendly capacitive displays impossible at the time, even while the rest of the industry left resistive screens behind. Microsoft also never got the hang of offering programs through an app store, delivering a half-baked solution late in the game.

Another seemingly huge contributing factor was the long gap between the announcement of Windows Phone 7 Series and the release of actual Windows Phone 7 hardware: nearly eight months. Not only were current users bitter that their devices were about to be obsolescent — because they would neither be upgradeable nor capable of running the latest applications — but potential buyers would be crazy to invest in an ecosystem whose sunset was growing near. The combination of these factors made former owners upgrade away from the platform and then stay away even when WP7 hardware (very slowly) hit the scene.

It seems that complacency, then, may have been Redmond’s greatest fault; while the rest of the industry grew and evolved to embrace new technologies and methodologies, Windows Mobile can arguably be accused of resting on its laurels, never really pushing the envelope after Windows Mobile 5. It’s only now, several years later, that the company is showing signs of life again with the introduction of Mango, Apollo on the horizon, and exciting hardware from partners like Nokia, Samsung, and HTC.

This was certainly not a comprehensive list of reasons that Microsoft now finds itself playing catch-up in the enormous mobile ecosystem. What else do you think led to the decline of WinMo/WinPho?

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