Ballmer Guarded On Windows Phone 7 Prospects

Microsoft may be finally learning to underpromise and overdeliver in the phone market—a key sector in which many of the company's past efforts, despite big pre-launch hype, have fizzled.

CEO Steve Ballmer on Thursday told financial analysts they should temper their expectations when it comes to sales prospects for Windows Phone 7, seen by many as Microsoft's last chance to become a player in the Apple and RIM-dominated U.S. smartphone space.

"A number of you had a chance to kind of ask me a question … which is how are we going to do," Ballmer told the analysts, at Microsoft's Redmond, Wash. headquarters. "And I think it's fair to say we've got a lot of work to do," said Ballmer.

Ballmer's reserved comments are in sharp contrast to the hype that surrounded Microsoft's launch earlier this year of KIN, a line of phones optimized for social networking tasks.

Microsoft billed KIN as "the next generation of the social phone" in promotional materials that accompanied KIN's April 12 launch. Less than two months later, Microsoft pulled KIN from the market amid sales that were so dismal the devices—previously priced at $50 for KIN One and $100 for KIN Two—were selling for one cent on Amazon.

Perhaps chastened by the KIN experience, Ballmer, while insisting that Windows Phone 7 gives Microsoft "a phenomenal opportunity" in the smartphone market, took a mostly measured approach in outlining the platform's chances of making an impact.

"It isn't all going to happen overnight, and yet I think the opportunity to do interesting work, differentiated work, to build market share, it's actually pretty good in the phone space right now," said Ballmer.

Microsoft plans to release Windows Phone 7 in time for the 2010 holiday season. Hardware partners include Samsung, HTC, and LG.