Windows Phone 7 is entering a tough market. Apple's iOS and Google's Android have become well-entrenched, widely used platforms, and both have application stores boasting tens or hundreds of thousands of applications. At launch, Windows Phone 7 will certainly have its virtues—a slick user interface, a first-rate e-mail client, and extensive integration with online services—but it will also lack a great many features that its competitors include.

But the modern, consumer-friendly, touch-friendly smartphone market is still a new one, expected to undergo substantial growth over the next few years. Microsoft may be late to the game, but probably isn't too late—there's certainly no winner yet. And the company has one major strength its competitors lack.

As cringe-inducingly awful as it was when Steve Ballmer got up on stage to sweat and holler about developers (developers, developers, developers...), the guy had a point. What Ballmer was, uh, explaining to the attendant masses of Microsoft salespeople was that developers—third-party developers, writing software for Microsoft's operating system, leveraging Microsoft's server software, writing using Microsoft development tools—were critically important to the company.

Playing to their strengths

Developer outreach—working with third-party developers, ensuring they have the tools and training to do their jobs, providing feedback, support, and access to technology—is something Microsoft does well. The way the company has tried to engage with the developer community with Windows Phone 7 is demonstrative of Redmond's commitment to developers, developers, developers. The contrast between Microsoft's approach and that taken by its competitors can be striking.

Microsoft's approach has been remarkably open and honest—in some ways, at least. Previews of the Windows Phone SDK were freely downloadable to anyone who wanted to take a look. The previews were public and unrestricted (above and beyond the usual "don't pirate this" restriction that's common to almost any Microsoft SDK), so developers have been free to write about their experiences on blogs, ask questions to Microsoft employees on Twitter, show sample application videos on YouTube, or do whatever they like.

The company has also created an interesting idea exchange, Mobile App Match. This allows people to suggest application ideas, and for developers to show off their applications and solicit feedback. The idea is to encourage people to get involved with the application creation process, and to strive to create as many good applications as possible.

In addition to this public work, the company has also engaged in a range of private liaisons with third-party developers to spur application development and porting to the new platform. Microsoft has offered cash to some developers to try to encourage them to port to the new platform, and has given other developers even earlier, private access to SDK versions and test hardware.

On top of this, the company has also relaxed its own anti-moonlighting provisions for its employees. In common with many technology companies, most Microsoft employees are subject to terms in their contracts stating that any software they create on their own time is company property. The company recognizes that there are many developers within its ranks who would be interested in writing third-party applications for the phone if only their contracts permitted it—especially because every one of those employees will be given a Windows Phone 7 handset, a move sure to spur even greater interest in the platform. To address this, Microsoft employees will be allowed to retain ownership—and profit, if they choose to sell their applications—of any Windows Phone 7 software they write.

Microsoft's development tools—Visual Studio and Expression Blend—are also well-regarded. The use of Silverlight—and hence .NET—as a development framework gives developers an environment that enables rapid application development (RAD), and ensures that Windows Phone 7 programs will be able to avoid a range of difficulties and bugs that are often a feature of development in languages like C. Expression Blend is a high-quality design tool that enables both coders and designers alike to construct good-looking user interfaces that fit well with Windows Phone 7's interface concepts.

The XNA framework, used for game development on the phone operating system, allows developers to write software that can be used with few changes on Windows Phone 7, the Xbox 360, and the desktop. For indie developers, this offers a range of tie-in opportunities that aren't possible on other platforms, and something that only Sony Ericsson might be able to challenge.

The Windows Phone 7 development story is by no means perfect; a lot of things that developers would like to be able to do are not currently possible. Some features are high-profile—the lack of multitasking support, for example, means that writing a Pandora-like streaming music program isn't really possible—but others are more subtle. Some user interface elements used by the built-in Windows Phone 7 software are not yet available to third-party developers. They can be reinvented, but ensuring they look and work exactly as they should is a challenge.

The company has also been frustratingly quiet on timelines; we still don't know when, exactly, Windows Phones will hit the market, nor do we know how regularly it will be updated.

Microsoft is under no illusions that these omissions should be corrected—some are likely to be fixed for version 1.0, though others are likely to take longer—but it has taken the view that it's better to provide fewer features that are high quality than it is to provide more features that are low quality. The limitations are certainly something that developers will be aware of, but for the most part, the company has lived up to its goal: Windows Phone 7 will, at launch, be a solid platform for developers, and those developers will be able to hit the ground running.

Developers, developers, developers are what matter to Microsoft, and it shows.

Show me the money

Given that Windows Phone 7 will be starting with an installed base of essentially zero (although amusingly and/or tragically, by the time it launches officially, Windows Phone 7 should have more users than the briefly marketed KIN achieved), any developer wanting to become an overnight millionaire is going to be better off with Apple's platform, with its hundred million users, for the next year or two.

Though Android handsets may have overtaken iOS ones in the US, Apple's App Store is still the benchmark by which all others are measured, and still boasts the most revenue of any phone application outlet. Apple's store is still the one to beat if you're looking to make a quick buck.

Working in Microsoft's favor, though, is that there's actually basically no money in smartphone software anyway. Apple may have managed 5 billion application downloads and $1.5 billion in App Store revenue (through the end of June 2010), spread over some 200,000 applications—bigger numbers than anyone else can offer—but those aren't really the important numbers.

More relevant to the indie dev wanting to make a quick buck is the stat that 50 percent of paid applications receive fewer than 1,000 downloads, at an average sales price of somewhere between $1.99 and $3.83 (depending on who's doing the estimating). After Apple's 30 percent cut, there's not a whole lot left, maybe around $2,500.

$2,500 is certainly better than a slap in the face, but it's not going to sustain a business. The problem for developers is that a few paid applications do extremely well, and the rest don't. The top 10 percent of paid applications get about 75,000 downloads. The next 10 percent, just over 9,000. A handful of developers are doing good business on the App Store—established games companies like Electronic Arts and Activision, for example, as well as a range of indie developers—and everyone else is making do with mere scraps.

For the developer who harbors dreams of selling a million copies and getting rich, iPhone development is still the better option. But for the developer who's writing programs just for the sheer enjoyment of developing, or to scratch their own itch to make their phone to do something special—for whom getting paid is a bonus, not the sole reason for writing code—the iPhone's big numbers advantage becomes a lot less relevant. For hobbyists, the greater ease of development on Windows Phone 7 could well count for a lot more than the (mostly hypothetical) promise of untold riches on iPhone.

A new day is dawning for Microsoft

Windows Phone 7 will also have a strong user interface—arguably superior to the iPhone's, indeed—but a much weaker Web browser, and for many, that kind of issue may be a deal-breaker. A good Web browser obviates the need for many applications—as Google realized after Apple refused to authorize its Google Voice application. The Windows Phone 7 browser won't, at launch, be as able as the iPhone and Android browsers at filling in any gaps that aren't covered by applications.

That said, the enormous effort Microsoft is exerting to draw developers to its platform looks like it's paying off. The Windows Phone 7 Facebook app—only available to people with one of the developer handsets—currently boasts in excess of 6,000 users, which is an (admittedly imperfect) indication that there are some 6,000 developers out there using the beta, and writing Windows Phone 7 software. The numbers on iPhone are surely higher still, but for a platform that hasn't even shipped yet, whose success is by no means assured, that's an extraordinarily strong showing. And it means that Windows Phone 7 is going to have a load of good-looking software at launch.

Whether these efforts will be enough to ensure the success of the platform is, however, another matter. The apps will be there, and they'll be good, but Microsoft is a couple of years late to the game. The software giant will need to deliver, deliver, deliver to draw even with the competition.