Windows Phone is stuck in a distant third place in the “smartphone wars.” The news for Microsoft’s tablet’s isn’t much better. Should app developers give up on Windows 8? The short answer is: no.

First, the bad news. Windows Phone has only a 6% share of the market in the U.S., and equivalent share in other key markets around the world. For tablets, it’s even worse. Of the 49 million tablets sold last quarter almost none of them were Windows 8 devices. According to IDC, Apple sold 19.5 million iPads. Samsung sold 9 million Android tablets. Microsoft sold less than 1 million. In fact, the combined total for Windows (including Windows RT) tablet sales last quarter was less than 2 million.

Luckily, the news isn’t all bad. Windows Phone’s market share continues to rise. New Windows-based tablets are expected to soon hit the market. Even better, the next iteration of Windows – codenamed “Blue” – may offer significant appeal to select app developers.

Many developers are likely asking themselves: Given the current market figures, is it worth developing apps for Windows 8? It may be – provided Microsoft’s “Blue” initiative succeeds. So far, the signs are promising.

Blue is the code-name for Microsoft’s upcoming version of Windows 8 (8.1). Blue is expected to offer several UI enhancements, support for small (7-inch) tablets and unify Windows across the current Intel and ARM processor architecture. Developers should receive the Blue update sometime in June. Other improvements with Blue include Microsoft making the update available via its Windows Store, which should make for a simpler, more customer-friendly process – and spur adoption. The innovative “flat design” and “live tiles” that are the visual pillars of Windows 8 will remain.

There are other positive signs. Microsoft has already sold 100 million Windows 8 licenses. As Windows 8 continues to sell, it is expected that more enterprises, businesses and users across all regions will upgrade their PCs. As this happens, users are more likely to adopt Windows 8-based tablets and smartphones.

Bill Gates noted earlier this week that “Windows 8 is revolutionary in that it takes the benefits of the tablet and the benefits of the PC (so) if you have Surface and Surface Pro you’ve got that portability of the tablet but the richness in terms of the keyboard and Microsoft Office of the PC.” A single OS across all device types is no doubt a major appeal to select audiences – and most likely especially to lucrative business customers.

Microsoft hopes that the benefits of its overall ecosystem, with phones and tablets fully integrated with desktop PCs will ultimately win over the market. This is probably a wise strategy – but it comes with obvious risks. Chief among them is the growing BYOD (bring your own device) movement that is allowing Android and iPhone users to use their devices within the enterprise. Though Microsoft’s total install base is about 1.25 billion, for app developers, Android and Apple’s iOS remain larger targets.

That said, the Windows 8 market potential is there. According to Wired, Microsoft has sold more than 100 million Windows 8 licenses, and over 250 million Windows Store downloads. “That means that after six months, Windows 8 is now selling on par with Windows 7.”

There continue to be other positive signs for Blue. Unlike iOS and Android, Windows 8 incorporates touchscreen, mouse and keyboard and offers a unified OS across all devices. Many users and retailers have said Windows 8 offers a superior experience on touchscreens. The expected UI improvements for Blue, including a possible return of the “Start” button, and improvements to “charms,” should further improve usability. The company has vowed to aggressively ramp up marketing and distribution of its touch-based devices – expect many more commercials. More companies will continue to offer new Windows Blue touchscreen devices, across price points and form factors, further enhancing the platform’s overall appeal.

In addition, there is expected to be seamless integration with Skydrive, enhanced personalization features and more robust synching of apps and data across devices (e.g. desktop and tablet). All of these should appeal to forward-thinking developers.

Lastly, it’s also possible that apps for Microsoft’s platform get more attention than on competing platforms. The Windows 8 store has approximately 60,000 apps – compared to over 500,000 on both Google Play and Apple’s App Store. This means that new, innovative apps may be more visible. Moreover, Windows utilizes a innovative UI design that incorporates “tiles” that deliver real-time updates to the user’s screen. All these, then, may mean there is more new opportunity for the Blue developer.

Below is a more detailed video review of Blue. The OS looks good, probably better than any other platform available.

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