Despite being caught flat-footed by the innovative iPhone, Microsoft says its own smart phone solution, Windows Mobile, will see healthy growth over the next two years. But the rationale for this prediction has nothing to do with advanced new features and everything to do with overall growth in the smart phone market.

"Fifty percent growth is the minimum \[over the next two fiscal years ending in June 2010\]," Microsoft managing director Eddie Wu told Reuters on Tuesday. "We're actually still seeing very good growth in \[mature\] markets like Europe and the United States."

Microsoft now expects to sell 20 million copies of its Windows Mobile software to customers via device makers in its 2007 fiscal year, which ends on June 30. Given at least 50 percent growth per fiscal year, that suggests Microsoft will sell 30 million units between 2008 and 2009 and 45 million units between 2009 and 2010. Microsoft sold just over 11 million units of its Windows Mobile software in the previous fiscal year, which ended June 30, 2007.

Smart phone sales are slowing in mature markets, but Microsoft says emerging markets like the Pacific Rim, the Middle East, Brazil, India, and Russia are more than making up the slack.

Globally, smart phone sales hit 12 million units in calendar year 2007, representing growth of 53 percent year over year. Analysts at Gartner say strong growth will continue through 2008 and 2009. Meanwhile, Apple says that it is on track to sell 10 million units of its popular iPhone device by the end of June, and Google's open Android smart phone platform should debut in new devices by the end of the year.