Usage of Microsoft’s Windows Mobile in smart phones will nearly triple from 2009 to 2013, according to iSuppli Corp. And while the operating system will slip from number two to number three in the market this year—due to the rise of free alternatives like Symbian and Android, shortcomings in its user interface, and the loss of some key licenses—iSuppli expects it to reclaim its second place position by 2012.

Windows Mobile will be on 67.9 million smart phones by 2013, up from 27.7 million in 2009, iSuppli says. This growth will give Windows Mobile a 15.3% share of the global market, second only to Symbian, which will control 47.6%. This growth will be driven by its ownership of a complete infrastructure, which is essential for the success of smart-phone operating systems.

“To win in today’s environment, a company needs not only an operating system but also device support, an application store, a broad portfolio of applications, and support from the developer community,” says Tina Teng, senior wireless communications analyst for iSuppli. “While Windows Mobile is losing some share to competitors in 2009, most of the alternatives cannot match Microsoft’s complete suite of offerings.”

For example, rather than just selling a basic operating system, Microsoft offers a complete set of services that can help clients in their customization and software integration efforts. In contrast, OEMs wanting to customize Symbian and Android by modifying the user interface or widgets must invest in add-on software. 

Losing the Palm and Motorola licenses won’t hurt Microsoft in the long run either. According to Teng, Palm never used Microsoft for all of its smart-phone operating system needs, so it didn’t represent a large amount of business. Also, Palm was working on its own operating system for the Pre. Meanwhile, Motorola’s shipments and market share for mobile handsets have been declining in recent years.

Offsetting these losses, Windows Mobile recently signed on a new licensee, LG, the world’s number three mobile-phone OEM. LG has pledged to produce 50 Windows Mobile handset models. And even after the loss of Palm and Motorola, Windows Mobile still leads the pack of smart-phone operating systems with 14 OEM licenses, while Symbian follows in second place with 10.

Yet Teng says that Windows Mobile still faces some challenges in its user interface, which looks poor next to Google’s Android and Apple’s iPhone. She notes its rigid folder system structure, which can be difficult for users to navigate. Also, Microsoft didn’t update it quickly enough, and its dashboard look was slow to market. Its inability to support capacitive touchscreen technology is a drawback for many OEMs as well.

In 2010, Microsoft expects to answer these criticisms with Windows Mobile 7, which will enhance the user interface and browser while supporting multi-touch control. According to Teng, this will make it much more competitive. Microsoft also will release a series of Windows Mobile 6.5 products this month that will feature a fresh-looking honeycomb start screen.

For more, see iSuppli’s report, “Severe Competition Among Smart Phones Leads to Consumer Benefits,” at www.isuppli.com/Pages/Severe-Competition-Among-Smart-Phones-Leads-to-Consumer-Benefits.aspx?PR.