Microsoft: Forget Android. Windows Phone and Apple in Two-Horse App Race

Talk about a party pooper. On a day Microsoft officially unveiled Windows Mobile 6.5 (aka Windows Phone), Verizon and Google announced that the nation’s largest carrier will soon be selling devices running the Android OS. But according to Aaron Woodman, Windows Mobile’s director of product management, Microsoft will have the last laugh. In an interview today he told me that Windows Phone and iPhone will emerge as the two major smart phone superpowers when it comes to app marketplaces.

Woodman also hinted that the Windows Marketplace for Mobile could reach beyond smart phones to larger screen devices, possibly tablets that run Windows 7. (There’s a reason why the branding is now Windows phone and not Windows Mobile.) Here are the highlights of our interview:

On why Android will stumble:

“When I think Marketplace I think the only people that are going to be competitive there are us and Apple. I think there’s so much fragmentation that will happen on the Android side it will be very difficult for app providers to build one app that works on all of the phones.

Where Microsoft is starting to do best is services. Marketplace is a service. My Phone is a service. Those are unique services to Windows phones. User interfaces will continue to change and evolve but services will be defendable differentiators. Apps won’t be a differentiator, services will. I don’t think Google is on a path as a partner to deliver those types of services.”

My Phone vs the competition:

“I don’t think there’s another product on the planet that will be as good as My Phone in that space. When influencers look at MobileMe and Ovi they go ‘ehhhh’. The don’t see the value. With My Phone you add SMS, photos, videos, and documents, and that’s really valuable. Every one of our competitors charges for that.”

On possibility of Xbox games coming to Windows phones:

“I think you’ll see Xbox as a brand evolve. I go back to Xbox Live, and it’s initial launch was about hard core gamers connecting to hard core gamers. And today Xbox live is much bigger than that. Games are important and we’re not shying away from that.”

On potential synergy between Windows Mobile and Windows 7 touch apps.

“It’s not insignificant that we call it Windows Marketplace for Mobile. I think over time you’ll see some alignment (between Windows Mobile and Windows 7). Ultimately, it’s a Windows value proposition. Do we have an opportunity to leverage ISV behavior because we have desktops? Yeah.”