Is This Microsoft's Mobile Game Changer?

The reviews are beginning to trickle in for Microsoft's (Nasdaq: MSFT  ) latest attempt to gain a foothold in the rapidly growing smartphone market, and to the surprise of many the initial feedback seems to be promising.

The cult of Steve Jobs will surely laugh at such a proclamation, but the new Microsoft Window 7 phone to many is a fairly matched competitor to Apple's iPhone and Google's (Nasdaq: GOOG  ) Android, and in some cases it outclasses these loved devices.

The new phones will be available in the United States market in November for customers with AT&T (NYSE: T  ) or T-Mobile service, and by next year for Verizon (NYSE: VZ  ) and Sprint (NYSE: S  ) . Microsoft also announced that the company has received commitments from 60 wireless carriers in 30 countries who will carry the Windows 7 phones. The phone's success will also be important for Qualcomm (Nasdaq: QCOM  ) shareholders as the company's Snapdragon processor will be inside all nine of the announced phones running the software inside.

Microsoft tries again
It was only May when Microsoft released its latest smartphone dud to the world. The Microsoft Kin was pulled from the market after about two months in the face of absolutely terrible sales, as should be the case for a poorly thought out and designed product.

The company has struggled to find a niche in a hypercompetitive smartphone environment. Their platform never could compete with the lineup of capabilities offered in Apple's (Nasdaq: AAPL  ) iPhone or Google's Android. At the same time, it also lacked the business and security features that make BlackBerry the most important enterprise device.

According to researcher Gartner, Microsoft's current mobile operating system only accounted for 5% of the worldwide market in the most recently reported quarter. Symbian, mainly used with Nokia products, has the largest market share with 41% of the market, followed by Research In Motion's (Nasdaq: RIMM  ) BlackBerry with 18%, Google's Android has 17% market share, and the Apple iPhone with 14% of the market through only one service provider in the U.S. market. To say Microsoft is far behind the competition would be a drastic understatement.

Promise in cloud computing
One aspect of the smartphone business where Microsoft might be able to make an inroads is through cloud computing. While Apple's and Google's software certainly have applications that allow for data to be stored on Internet-based servers, there is no clear leader in the space as of yet.

Microsoft seems to have made this a point of focus for the company's new operating system allowing users to store data to said cloud servers and stream music from the Microsoft Zune Pass service. The operating system also allows direct integration with Xbox Live. This is significant because it will allow users to connect and play games with millions of gamers through a connected, established service. If the gaming sector continues to grow, this will be an important differentiation for the Microsoft platform.

In addition, Microsoft still has an opportunity to take advantage of its immensely popular Word, Excel, and PowerPoint software. The new phones are designed for seamless integration with these products, which are not as easily accessible on competitors' platforms. Microsoft should also be looking for ways to incorporate a service similar to Google Docs to further improve the functionality of cloud-based software.

The Foolish bottom line
Microsoft clearly has a long row to hoe in regaining market share in the smartphone space, but it appears the company is finally serious about moving forward in this effort. While Microsoft has lacked in recent years in terms of innovation and exciting growth, the company's superior balance sheet and cash-cow franchises have given it another shot to win share in this important market. The jury is still out for sure, but don't count this 800-pound gorilla out just yet.

Would you give any of Microsoft's new devices a shot? Let us know in the comment box below.

Andrew Bond owns no shares in the companies listed. Apple is a Motley Fool Stock Advisor selection. Microsoft, Google, and Sprint Nextel are Motley Fool Inside Value selections. Google is a Motley Fool Rule Breakers recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Microsoft, Google, Apple and Qualcomm. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 12, 2010, at 10:58 PM, uc22 wrote:

    After trying out one of these phones (developer hardware), I would say it surpasses Android's best phone and is equal to IPhone in responsiveness. I like the UI and think it is rather intuitive but of course that is a matter of opinion. I will be getting one and developing for it.

  • Report this Comment On October 13, 2010, at 12:20 AM, lales wrote:

    "and in some cases it outclasses these loved devices."

    Do you think you can wait, oh, maybe until the Win 7 phone is actually released before bothering to write (and publish) this sort of poorly thought-out hype?

    I guess I'm kind of funny that way, but I dunno, I'd like to see how it actually performs before using $2 words like "outclasses".

  • Report this Comment On October 13, 2010, at 5:57 AM, tsinvest wrote:

    I would buy one. Android is too much of a mish mosh yet...no uniformity across programs. I would like the MS Office integration. I wait and see, but I would certainly consider it.

  • Report this Comment On October 13, 2010, at 12:04 PM, jrmart wrote:

    Unfortunately there's no way to compare this new ME TOO product from Microsoft until it hits the streets.

    If Steve Ballmer had anything to do with it, then it's probably another disaster like the ZUNE. In the past quarter, the IPHONE and ANDROID smart phone market share grew to over 30%, while Microsoft window's mobile share dropped to 5%.

    Additionally, there have been many tablet computers of different stripes since 2002, when Microsoft introduced the Windows XP Tablet Edition. All have failed, even the recent ones using Google's Android operating system are NEAR-USELESS SLABS. Apple change all of this in April when it introduced the IPAD.

    The most important thing today is the way Apple ties all their products together using ITUNES.

    In the last 5 years Apple's stock went up 500% while Microsoft stock returned 1%. ITUNES has been the glue that binds Apple products together.

    Google and Microsoft can come out with lots of ME TOO products, but they will never really impact Apple until they develop a software product like ITUNES.

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