Microsoft, trying to reverse disappointing sales for its Windows Phone, is counting on Samsung Electronics and other manufacturing partners to step up retailer incentives and boost in-store promotions.

Both Samsung and HTC have committed to increasing marketing budgets for the phones, said Andy Lees, president of Microsoft's mobile unit.

While manufacturers will determine how the money is spent, some of it will probably go toward spurring retail staff to tout Windows Phone models, he said.

New handsets with the new Windows Phone 7.5 will go on sale in the coming weeks, Lees said.


Since the release of the previous version last October, the Windows Phone has missed the company's sales expectations, and Microsoft has continued to lose ground to Apple's iPhone and devices based on Google's Android.

Microsoft needed to do a better job of marketing the new software, which was much improved, said Michael Gartenberg, an analyst at Gartner.

"From a technical perspective, it really does put them on par with the other competitors, but a lot of times Microsoft gets it right with the technology and then fumbles the marketing message," he said. Mobile-phone retailers haven't co-operated in the past, Gartenberg said. "If you went to a store they showed you anything other than a Windows Phone. If you asked for a Windows Phone, they tried to talk you out of it."

Microsoft was especially reliant on the carriers' retail salespeople in the US, where more than 80 per cent of phones are sold by stores owned by mobile operators, Lees said. In other countries, a larger percentage of handsets are sold by the phone makers themselves.

He didn't specify what form the incentives might take.

Windows Phone 7.5, also known as Mango, was released last month to existing Windows handset customers.

In addition to more aggressive marketing, Microsoft's partnership with Nokia would help sales, Lees said.

Nokia announced earlier this year that it would base its handsets on Windows Phone software, a bid to reinvigorate its smartphone strategy.

Nokia directly or indirectly controlled more than 6000 stores, Lees said. Gartner forecasts that Microsoft will become the number two smartphone operating system in 2015, with market share of 20 per cent. That would vault it past Apple's iOS, with Android remaining in the top spot.

Achim Berg, head of Windows Phone marketing, said in September that the 20 per cent share may be a conservative estimate.

Next year, Microsoft would account for 11 per cent of the market, up from 5.6 per cent this year, Gartner said in an April report.

Lees declined to forecast numbers himself, except to say he expects market share to rise starting in the first quarter of next year.

Manufacturers planned to produce a Windows phone that uses the high-speed wireless technology known as long-term evolution, or LTE, in the "not-too-distant future", Lees said.

That would make mobile carriers more eager to promote the Windows Phone.

Cheaper models also would be produced, giving a boost to the operating system, Lees said.

While handset makers and the carriers determine prices and subsidies, consumers should see Windows Phone devices for less than US$100 ($130) in the US, he said.

"The stars are really starting to align for us," Lees said.

The new software, which better integrates apps, search and phone features, received positive reviews from AllThingsD, Gizmodo and Bloomberg's Rich Jaroslovsky.

Search for a movie, and the phone brings up a synopsis and lets you buy tickets. A local app gives you nearby restaurants and if you've downloaded OpenTable, there's a reserve button right there.

The search key brings up the option to scan book or album covers for product matches. Plus the software can also listen to a piece of music and identify it.

- Bloomberg