According to Bill Gates local newspaper the Seattle Pi Microsoft has only sold18 million Windows Mobile software licenses which is 2 million short of what was forecast. The news is particulary bad as Apple and their new 3G iPhone is now available in up to 40 new markets including Australia.

The newspaper claims that  Microsoft was still able to increase Windows Mobile's overall share of the worldwide mobile phone operating system market, despite increased competition from Apple's iPhone, Research in Motion's BlackBerry and others, said Andy Lees, senior vice president of Microsoft's Mobile Communications Business. A big contributor to Microsoft's success has been the HTC range of phones and the Motorola Q and Samsung Blackjack all models that are set to come under pressure from Apple.

Lees, attributed the lower-than-projected Windows Mobile sales to some devices coming to market slightly later than previously expected. He declined to say which ones.

"That would be unfair to the OEMs," he said, using the common abbreviation for original equipment manufacturers, or phone makers.

"The OEMs give us predictions as to when they'll ship the devices, and I don't want to put them in the dunk tank, if that's a phrase, by implying that they didn't stay on time. That's confidential conversations that we have."

Robbie Bach, president of the Entertainment & Devices Division, touted the 20 million-unit projection repeatedly during presentations at industry trade shows during the past year.

The first clue about the shortfall emerged in early June, when a letter from Lees to the company's partners said the company would sell "nearly 20 million Windows Mobile smartphone licenses" for the year, as opposed to the company's previous promise of "more than 20 million" licenses sold. Asked about the change at the time, a Microsoft product manager said any shortfall would be nothing more than "a rounding error."

Microsoft claims that it is outperforming the Blackberry they say that  IDC data shows that Windows Mobile devices have outpaced Research in Motion's unit sales in the past four quarters, and sold more than twice as many as Apple. RIM and Apple offer both software and mobile phones, while Windows Mobile comes on phones made by independent device manufacturers.

Microsoft released Windows Mobile 6.1, with a streamlined user interface, in April, and a series of device manufacturers have come out with new and upgraded phones based on it. Devices using the new version include the HTC Touch Diamond, the HTC Touch Pro, and the Samsung Omnia. Devices coming out later include the Sony Ericsson Xperia X1.