By Vishal Gurbuxani

On Nov. 8, with an estimated $1 billion dollars of spend, Microsoft re-entered the mobile space with a vengeance. Its ultimate goal is to displace the fast-growing Apple iOS and Google Android devices, but the question on everyone’s mind is whether or not Microsoft has what it takes.

In 2004, Windows Mobile had 23 percent of worldwide smartphone sales and was projected to beat Symbian to become the leading mobile operating system by 2010.

Windows Mobile had great devices and a solid platform for developers to build mobile applications.

However, Microsoft lost out on its overall user experience.

Windows Mobile devices were too techy and, as a result, alienated consumers from truly leveraging the power of the device. 

Fast-forward to the present and Windows Mobile is on a sharp decline and some say, on the edge of extinction.

Busting doors, not windows
The newest entrants to the mobile arena are Apple and Google.

Despite Apple’s tightly controlled and closed approach, it remains very innovative and concise in its messaging to the average consumer.

Android, on the other hand, is taking the market by storm and has left the mobile ecosystem in utter chaos and confusion.

Devices ranging from televisions to tablets and even refrigerators are all using a customized flavor of Android.

However, the simplified user-experience that Apple provides is simply lost with Android.

With Windows Phone 7, Microsoft is taking a page out of the operating system playbook, which it knows very well.

There are sharp similarities between the battles for mobile dominance versus what happened in the personal computer space.

Apple released the first Macintosh and took the world by storm. Unfortunately, at the time, Apple’s innovativeness slowed it down and allowed Microsoft to build an ecosystem that overthrew its sleek innovation.

Aside from Microsoft, there is not a stronger company dedicated to building a sustainable mobile ecosystem inclusive of the wireless carriers, handset manufacturers, ISVs and stores.

While Apple wants to control the entire process and Google gives everything away for free, Microsoft has a real chance of becoming the dominant force in mobile. But there is a specific path that will lead to this success.

Here are strategic points that Microsoft has to follow to come out on top:

1. Make the Windows Phone 7 operating system free

If Microsoft wants to win the battle, it cannot charge handset manufacturers a fee to use its OS. The sheer growth of the Windows Phone 7 ecosystem will outweigh the costs of giving it away for free.

2. Microsoft has a huge lead with Xbox, but is it innovating fast enough?

Microsoft has created an amazing gaming empire from the Xbox franchise, but the challenge will be to go beyond the gaming audience to attract the mainstream.

Microsoft’s goal should be to get an Xbox in every home and to create a completely connected experience to the Windows Phone 7 handset that goes beyond the gaming experience.

3. Create more content following the three screens: mobile, online and living room

Microsoft has these three elements in place. It has many online portals, including Bing, Xbox, Kinect and Windows Phone 7.

Unfortunately, Microsoft lacks a three-screen, unified user experience and, more importantly, killer content beyond games to entice consumers to engage with that connected experience.

4. Spend more money on educating the consumer

Android has a serious fragmentation issue and Microsoft needs to think differently to guide consumers in their buying decisions.

THE MOBILE ECOSYSTEM is big enough for many players to be successful.

If Microsoft wants the coveted lead, then 2011 will decide its fate. It needs to execute precisely and encourage an already-cluttered ecosystem that it is worth spending dollars on Windows Phone 7.

Vishal Gurbuxani is cofounder of Mobclix, Palo Alto, CA. Reach him at [email protected].