Is Motorola saving money by skipping Windows Mobile 6.5?

According to documents purportedly leaked by AT&T, a Motorola handset originally slated to run Windows Mobile has changed Operating Systems mid-stream, and will be released with Android by the end of 2009's third quarter. The "Iron Man," or "Heron" as it's called on the AT&T document, includes all the Windows Mobile specs (IE6, Pocket Outlook, Exchange ActiveSync) with the caveat "Specifications subject to change due to move to Android."

Both Motorola and AT&T declined comment today.

Motorola's handset division is expected to weather $1.2 billion worth of cutbacks and restructuring this year, which began last January with a staff reduction of 4,000. Part of that round of layoffs included 77 employees in the company's Plantation, Florida facility, all of whom were working on the Windows Mobile platform. The company said it would no longer conduct development on the platform there.

In the company's earnings call shortly thereafter, Motorola co-CEO Sanjay Jha said, "As you know, Windows 6 series is available in 2009 and ...we believe in 2009 Android is more competitive; more of our effort and focus in 2009 is going to Android, but in 2010 when Windows 7 will become available, we will then participate in a more focused way in Windows Mobile 7 in 2010."

Motorola's enterprise mobility solutions run Windows Mobile almost exclusively, with products ranging from the standard mobile handset to PBX-integrated Wi-Fi devices and fleet computers. However, analysts now suggest that Windows Mobile 6.5 offers no incentive for businesses to upgrade, and that Windows Mobile 7 is the next "must-have," if it arrives on time.

In response to Betanews' discussion with analysts about the subject last week, Avi Greengart, Research Director of Consumer Devices at Current Analysis, defended Windows Mobile 6.5 as a viable OS for consumer use.

"While 6.5 isn't a ground-up rewrite of the OS, the consumer-oriented upgrades aren't trivial, either," Greengart told Betanews. "Prior versions of Windows Mobile -- even those with consumer-oriented skins on top like HTC's TouchFLO -- were designed to be used with a stylus, not a finger. Windows Mobile 6.5 makes big strides in making the OS more finger-friendly. Instead of menus, you get rows of icons, and in the most recent build I tested, scrolling and selection were dramatically improved. I also wouldn't underestimate the appeal of App Marketplace; it was always possible to add apps to the platform, but it wasn't always obvious to mainstream consumers exactly where and how to do that (and Apple has done a terrific job educating the market at large about how a rich selection of apps can enhance the value of a mobile platform). Finally, Microsoft is beginning to better take advantage of its various assets and is integrating more Live services into the OS."

So there is potential for increased consumer interest in Windows Mobile 6.5. But Android has much more explosive interest brewing, according to research, and Motorola looks to be ready to capitalize on that. Strategy Analytics this month, for example, predicted that Android would be the second fastest-growing smartphone operating system behind iPhone this year, experiencing a 79% growth rate.

Strategy Analytics' Director Neil Mawtson said, "Android has fast been winning healthy support among operators, vendors and developers. A relatively low-cost licensing model, its semi-open-source structure and Google's support for cloud services have encouraged companies such as HTC, Motorola, Samsung, T Mobile, Vodafone and others to support the Android operating system. Android is now in a good position to become a top-tier player in smartphones over the next two to three years."