Windows phones to miss out on new software

As it struggles to gain a foothold against the iPhone and Android phones, Microsoft Corp. is planning to issue a dramatic update to its phone software, one that won't be available to current Windows Phones.

The new software, Windows Phone 8, will be available on new phones this fall, Microsoft said Wednesday at a presentation in San Francisco. The software will bring Windows phones closer to PCs and tablets running the company's upcoming Windows 8, which is also scheduled to launch later this year.

With its planned software updates —and the Surface tablet computer it introduced earlier this week— Microsoft is taking dramatic steps to ensure that it plays a major role in the increasingly important mobile market.

But the company is playing catch-up in an arena dominated by Apple and Google. Microsoft launched Windows Phone 7 in 2010, making a clean break with its previous phone software, which had become outdated. Nokia Corp., until recently the world's biggest maker of phones, has pledged to use it for all its smartphones, and launched its first Windows Phone in the U.S. earlier this year.

Sales have been anemic, however. IDC estimated that 2.2 percent of the smartphones shipped worldwide in the first quarter of this year ran Microsoft's software, compared to 23 percent for Apple and 59 percent for Android. Still, U.S. wireless carriers support Windows Phone, seeing it as a valuable counterweight to the clout of Apple Inc.'s iPhone and phones running Google Inc.'s Android software.

Windows Phone is making progress in one respect. Hit games "Words With Friends" and "Draw Something" will be among the apps available for Windows 8. There are 100,000 applications available for Windows phones today, Microsoft said. That's far less than the number of apps available for iPhones and Android phones.

Windows Phone 8 will accept expansion memory cards, like Android phones do. It will also work on processors with more than one computing "core," which are common in high-end smartphones. More cores boost computing power and can cut power consumption.

The new software will also work with near-field communications chips, allowing phones to be used in place of credit cards at some payment terminals. At the conference, Microsoft's head of phone software, Joe Belfiore, demonstrated how NFC can be used to link two phones so their owners can play a Scrabble-like game. Tapping the phones together can engage NFC, and prompt the devices to establish a link over Wi-Fi.

Some recent Android phones come with NFC capabilities, but they're missing from the iPhone.

Windows Phone 8 will share the operating system "kernel," or most basic functions, with Windows 8 RT, which will run on tablets and computers. That means manufacturers will have an easier time making hardware that can use either system. Developers will have an easier time moving applications from one platform to the other, Microsoft said.

Changing its phone software at such a basic level means that it will be difficult to install on existing Windows phones.