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Editors Note This Is The First In An Occasional Series

Editor's note: this is the first in an occasional series of stories on the behind-the-scenes efforts by Microsoft to bring Windows Phone 7 to market. REDMOND, Wash.--The first Windows Phone 7 devices won't hit the market until the holidays. But in various conference rooms here on this Thursday in late May, it's already crunch time. Microsoft has only a few weeks to get a near-final version of its code ready so various wireless carriers can begin the months of testing required before they'll start selling a new device. In Studio F, one of three newer buildings that house Microsoft's vast phone effort, the team working on the phone operating system itself is having its daily meeting to assess the software in terms of bugs and performance goals. Microsoft developers call these gatherings the "shiproom," because in days gone by it was in those conference rooms that Microsoft would declare a product to be good enough to ship--that is, release to manufacturing. In an equally nondescript conference room in Studio H across the street, a second shiproom meeting brings together people working on companion Web services, such as location and the application marketplace, that are part of the Windows Phone 7 release. In a third room, back in Studio F, another engineering group from Microsoft is meeting with counterparts from chipmaker Qualcomm to discuss the microprocessing guts of their new phone. The launch of the new phones is critical for Microsoft, which is trying to play catch-up with Apple and Google. Despite having been in the phone business far longer than either of those two rivals, complacency, lack of focus, and bad bets have left Microsoft an afterthought in the cell phone business. It now has just a single-digit percentage market share among smartphone operating systems, trailing Symbian, RIM's BlackBerry, Apple's iPhone, and Google's Android, according to Gartner. Windows Phone 7 is the big bet to reverse years of decline, assuming it's not too late. Leading that effort is vice president Terry Myerson, the 37-year-old former head of the Exchange Server development team. Myerson is the rare Microsoft exec who knows what it's like to be an underdog. He came to Microsoft in 1997 through the acquisition of his own Web analysis company and went to work on Exchange back when it was badly behind IBM's Lotus Notes software. A Duke-educated engineer with dark hair and brown eyes, he looks like your average Microsoft coder, albeit with the salty vocabulary and bluntness of a merchant sailor. "We've got a number of things that could look impossible if you look at them subjectively," Myerson said in an interview with CNET, "but it you actually piece by piece take it a part, you see a path forward." CNET was granted an unusual, behind-the-scenes look at the final stages of Microsoft's Windows Phone 7 development, including sitting in on these key "shiproom" meetings. In the meetings and subsequent interviews, executives and developers who were surprisingly candid about both the mistakes Microsoft has made in the mobile market and the importance of their current work. No doubt, Myerson's challenge is growing by the day. Google has demonstrated a new verison of Android, code-named FroYo, that adds better performance, the built-in ability to act as a Wi-Fi hot spot, and even an improved connection to the very Exchange server that Myerson helped develop. Meanwhile, Apple is nearly ready with a new iPhone that adds a front-facing camera for video chatting and a better screen to go along with a laundry list of new software features added into the latest release of the iPhone's operating system. Myerson, who agreed to take on this job in October 2008, has picked up the pieces on a next-generation mobile operating system that Microsoft has been developing in fits and starts for several years now, switching leadership and approaches several times along the way. Despite its long and winding road to fruition, Windows Phone 7 has a chance, Myerson says with a quiet conviction that sounds more like an engineer sure of his work than a salesman looking to close the deal. Myerson is convinced that Microsoft can get back in the game if Windows Phone 7 really nails the set of things that it does tackle--merging personal and work contacts, integrating Xbox Live games and Zune music and video, including mobile versions of Office and aiming to bring together photos from various social networks. "We've got a good product," he said. " I actually do believe that. I think we are going to actually have a lot of happy customers." Microsoft has the core of the software ready, but faces the tricky task of making sure that software is ready to run on different hardware from several phone makers. Inside Redmond, Microsoft's development teams are heads down. The features are basically set. The goal now is to make the experience around those features smooth, making sure that bugs don't cause crashes or drain the battery too quickly. What they've already done hasn't been easy. Although it retains Windows CE at its core, Windows Phone 7 has a completely new look and interface. The overhaul was so significant, that when it was first outlined in early 2009, the project's leaders handed out a bottle of Pepto Bismol to the several hundred people on the development team. "The entire user experience of Windows Phone 6 was built on a certain graphics framework," Myerson said. "We decided to change that to a different one. We sort of decided that top down and teams just had to digest that, so it was sort of a joke that people were given that." But doing so many things from scratch means that in a lot of ways Windows Phone 7 is more like the first version of a product than the seventh major release. Although it has won some early praise for breaking ground in some areas, Windows Phone 7 takes a step backwards in others. In particular, it doesn't support features like copy and paste and multitasking that were already part of the old Windows Mobile. "I think we are going to have something very high-quality and different this holiday," Myerson said. "We won't be better on every dimension and we won't be better on a feature point on all of the dimensions we wish we could... I think about this really as a first release, a first release for this team." It's with that in mind that Myerson stuck to his guns on features like that much-debated cut and paste. "If I had more time," he said. "I'm not sure that would make the top 10 list of things. I think users use cut-copy-paste periodically, (but) there's other things they use more frequently." It's not that there aren't other features that Myerson wants to see part of the Windows Phone, but he knows that Microsoft already has enough on its plate. "I try to keep everybody focused on finishing," he said. "In some ways, that's what I worry about most. It's so easy to dream about what's next." Being that far behind on features, Myerson said, makes it even more important that Windows Phone 7 does the things it does do very well. With that in mind, he ducked into each of the status meetings to play mediator, facilitator, and sometimes blunt coach. The mediator In the first meeting, 14 people sat around a standard-issue Microsoft conference table--big, nondescript, with a light wood finish--while 26 more stood or found something to lean on. The attitudes and attire varied greatly, starched shirts next to T-shirts, one developer getting excited about a bug while another got defensive. Among the agenda items was a discussion on how fast the phone is turning on. "Am I happy about the boot time, am I legitimately happy?" asked Alex Hinrichs, the release manager. You should be, responded developer Maher Saba, noting that the device is now booting in 19.5 seconds, one second away from the eventual goal. Saba, Myerson said, is something akin to a mathematical quant on Wall Street, measuring everything from the frame rates of video to the effect of changes on free memory and boot time. Saba's focus on performance often has him at odds with Laura Butler, the head of the graphics team, whose efforts make the operating system better to look at and use--and sometimes slower. "They fight a lot," Myerson said, as he leaves that ship room and walks across the street to a second shiproom. Over here, the Microsoft crew was in a better mood. Each of roughly a half dozen test managers verbally attested to the fact that the services code has reached a certain quality threshold, effectively signing off on where things are. The group applauded, traded compliments and posed for a group photo. However, Myerson left the meeting struck by an off-handed remark one of the workers made about the Marketplace (Microsoft's version of the App Store) being momentarily down on one of the prototype phones--this despite the fact that the services group had just signed off on the quality of the store. "In some ways the things that are tracked in great detail are always the things that seem to get taken care of," he said. "It's the intersections where complications occur." At least this day no one was stuck in a Bozo costume. After one reporter wrote an article saying that Microsoft should just hire Bozo the clown to run Windows Mobile, Myerson took to wearing a clown costume to meetings. For a while, the mobile group had a running joke: Screw up, and you have to put on the Bozo suit. "We've had a few clown suit wearings," Myerson said. At various times, Myerson has donned a Braveheart costume, brought in cheerleaders, and ridden around on a horse. Fortunately, these days, the clown suit hangs on the wall of the device shiproom. A blunt assessment Catching up with the market leaders, Myerson figures, is a multiyear project, something he warned both executives and colleagues when he took over the project. "We're going to reset, but it is going to take us five years to build a product we all want to have," he said. Myerson's less-than-rosy assessment scared off more than a few people. "There were people that looked in the mirror a year ago and said, well, if we aren't going to win next year, I am out of here," he said. "There were people that looked in the mirror and said what a great fun project to spend the next three to five years of my life on and kind of buckled down for it...Those are the people you want because that's how long it is really going to take. The company has that level of commitment." If anything, Myerson hopes that is what he is bringing to the team--clarity, along with enough resources to get the job done. "If you invest in people as craftsman and give them great tools, I think they will build great products." Myerson said. "Probably the most important thing we can give these guys is a clear plan. If the plan changes every three months, it's hard to do great engineering." With that in mind, the company decided more than a year ago to start over yet again, with a new approach and a firm target--holiday 2010--to have the all-new Windows Phone on the market. "I think when we look back on the release five years from now, this was a foundational release, not the release that broke through," Myerson said. "We've got some tough competition." In particular, Microsoft will need to make a good impression with carriers--the companies like AT&T, Verizon, Sprint and T-Mobile--who decide which phones will get the prime shelf space and the big ad campaign, and which will not make the cut at all. "They take all the burden of support calls and all the burden of selling it," he said. Given that "they want it months ahead of time so they can learn how to sell, learn how to support it." For Myerson, the large role of the carriers is a shift, having spent his career doing products like Outlook and Exchange. There, Microsoft decides what features will go in a product and when it will hit the market. Resellers and hardware makers largely take their cue from Redmond. While clearly more difficult, for Myerson there is something about making phones that is more rewarding than building server software: "Building a product that my children and my wife will use every day," he said. Indeed, both his wife and kids are already using his prototype at home. His children are avid fans of Goo Splat, one of the first games that ran on the early Windows Phone 7 prototypes. If it takes a few seconds longer for the game to boot up, or if the goo doesn't drip just right, he'll hear about it. "I don't need to rely on metrics in shiproom," Myerson said. The partnership puzzle In what turned out to be another typical cold, cloudy spring afternoon, teams from Samsung and Qualcomm meet in separate conference rooms with Microsoft, each going over their specific issues with Microsoft. Having to coordinate among chipmakers and Microsoft and hardware makers and carriers is a lot of work, Myerson acknowledges. It requires a lot more companies working together than is the case with Apple, which now even designs the iPhone's main processor. "The OEM partnership model we have is more complicated," Myerson said. "We aspire to have the same level of end-user finish as Apple, but getting that level of user finish requires a level of partnership." The idea of partnering with phone makers like Samsung and HTC is to get the benefit of their ideas as well as have more models than Microsoft could if it built the hardware itself. But add that to a business model that also includes 180 different carriers across the country as well as other components and it's a lot to juggle. "Between Qualcomm and Broadcom and Samsung and LG and HTC, AT&T and T-Mobile, it's just very partnership-complex, it just is," Myerson said. "I don't know any other way to describe it." Microsoft has considered but rejected the idea that it should go it alone in the phone business, building its own hardware to better take on Apple. Among other reasons, it's just how the company prefers to do business. Although it makes the Xbox and Zune, the company prefers to build software that is used a wide range of hardware makers. "We've made it work many times in the past and as you know, there's times in the past where it hasn't worked out so well," Myerson said. "We're aspiring to do it well, which unfortunately does take more time." But time is running out for Microsoft, which needs to get the first devices to carriers soon if it wants the devices to be on sale by the holidays. Hence, the conference rooms inside Microsoft this day are filled, not just with folks from Microsoft, but also from its many partners. As the work day draws to a close, the hours-long meeting between Qualcomm and Microsoft engineers beaks up. Myerson meets in his office with Torrey Harmon, a Qualcomm senior vice president. The conversation is informal--a mix of some subtle salesmanship and small talk and venting about some of the project's more challenging aspects and people. Between trading jabs at various partners and competitors, the two turn their attention to their own companies' partnership, discussing how they might further reduce the amount of friction between the teams working on the chips at Qualcomm and those working on the software at Microsoft. "We want you to see us as an extension of your team and we're trying hard to figure out how to do that," Harmon said. Qualcomm recently hired one of the members of the Windows 95/98 development team to help the company in that effort. "We've made a lot of progress and still we've got a ways to go. We'd like just to look like another one of your technology groups, that's our goal." As the conversation continued, they talked about the battery life issues on a particular prototype. "Usually it runs out by about 2 o'clock," Harmon said, although, that's better than before a recent software build. "It was running out at about 11 o'clock when I first got it. It's better already than it was." As it often does, Myerson's mood this day shifted quickly between optimism and pessimism. "I just want to survive this launch," Myerson told Harmon. "If I can get out there and get some respect, for lack of a better word, from consumers, everything will get easier. Right now things are hard." Keeping the peace Myerson headed back to a nearby conference to meet with Samsung. Myerson, along with a pair of Microsoft account executives, met with two Samsung officials--Junil Hong, vice president of software development and W.S. Lee, vice president of product planning. He walked in in his Hawaiian shirt, and the Samsung executives, each in a sport coat, were taken somewhat aback. When they had met with Myerson the day before, Myerson was in a suit. That, he explained, was an anomaly. "Yesterday was the first time in my entire Microsoft career I had worn a suit," Myerson explained. "It was for a humor video." Myerson quickly got down to business, clarifying why his company is insisting that each phone needs to have its own unique identifier. It's not, he insisted, part of some big plan by the Windows Phone group to control its hardware partners. Rather, it's a demand that comes from Microsoft's Xbox developers. It seems they want to make sure that if someone is cheating on the Xbox Live program that they can shut down the cheater. "This will be the first non-Xbox with access to Xbox Live," he said. "No one has an achievement on Xbox that they didn't earn. It's a trusted system, so, the Xbox team, one of the conditions they had for us to be able to put Xbox achievements and badges into the system is that we need to put certain security measures in." The message seemed to get through, and the group moved on to other topics, with much discussion around which features and networks to support when. Myerson shared an optimistic forecast from one supplier, with a caveat. "There's two quotes I learned early in my career," he said. "One is that 'hope is a useless engineering tool' and the other is 'Don't practice faith-based engineering.'"