Apple Roundup: Microsoft Takes On the iPhone

With the way Apple  (Nasdaq: AAPL  )  not only straddles the burgeoning tablet and smartphone markets but also holds sway across the computer, home-entertainment, and media fields, the moves it makes can have an impact on the future of hundreds of companies. With that in mind, we're taking a look at the week in Apple news to see how the latest activity affects the Cupertino giant, its suppliers, and even its competitors.

Microsoft re-enters the mobile fray
Microsoft'
s (Nasdaq: MSFT  ) mobile market share has dropped precipitously as its Windows Mobile 6.5 operating system increasingly looked dated next to what Apple and other mobile competitors are offering. However, the company's making a splash with the rollout of Windows Phone 7.

Aside from the bizarre "always delightful, and wonderfully mine" tagline Microsoft unveiled during its Monday rollout event, reviews have generally been positive and the launch went off without a hitch. Phones will be available this holiday season on both AT&T (NYSE: T  ) and T-Mobile and will include phones from LG, HTC, Samsung, and Dell (NYSE: DELL  ) .

HTC's Surround phone, coming to AT&T for the holidays.

But despite the good news, some of Microsoft's carrier relationships are troubling. The blowout success of Motorola's (NYSE: MOT  ) Droid illustrated the outsized impact of having a strong carrier pushing a new release. AT&T, for one, looks to be pulling its weight; the company will set up a special Windows Phone 7 area in each store, and in a few hundred locations it will even feature a larger Microsoft-only area, featuring netbooks and Xbox 360 systems.

However, while Sprint (NYSE: S  ) lined up to announce that it will offer a Windows Phone 7 device early next year, Verizon (NYSE: VZ  ) was conspicuously absent from the launch. Big Red has said it still plans on launching a Windows Phone in 2011, but you have to wonder whether relations between the two companies got strained during the marketing of the failed Kin project. Microsoft has claimed that because of limited resources, it had to focus on phones that work on GSM networks, which is what AT&T and T-Mobile use. Sprint and Verizon, however, don't. However, if Verizon was willing to make a big push on Windows Mobile, you'd think that a company of Microsoft's means would have put in the extra work to get the phones ready for Verizon in time for the holidays.

I've long been skeptical of Microsoft's mobile ambitions. It's not that the new Windows Phone isn't a worthy competitor; it just faces a severe content disadvantage, with Apple and Google's Android both enjoying strong support from a community of developers. In addition, Google's Android has made huge inroads with handset makers, and its free licensing strategy helps reduce costs.

Even though Microsoft finds itself back in the mobile game, it takes a lot more than an innovative product to crack into the high-end smartphone market -- as we learned from Palm last year.  

Read more about Microsoft's mobile launch.    

No LTE iPhone for you. Come back, one year!
Blog TechCrunch, which reported that Verizon was getting the iPhone before The Wall Street Journal did, is now reporting that this CDMA model of the iPhone won't take advantage of next-generation 4G LTE technology. For users wanting the faster download rates LTE technology offers, the news is likely to be disheartening. However, the reports are consistent with how Apple operates. When the iPhone made its debut, it didn't hop aboard AT&T's 3G network, even though AT&T had introduced 3G three years earlier. It's just not in Apple's nature to risk compromising the quality of its product with untested technology.

In the case of 4G rollouts, Verizon hopes to have LTE in 38 cities by the end of 2010, while AT&T won't be rolling out its network until the middle of next year -- the same time as the next expected iPhone refresh. The initial series of LTE chipsets will probably be fairly power-hungry, too.

The process of getting a sample chipset design and then designing a phone around that chipset is a long and arduous process. While other companies will hurry forward with their LTE-compatible phones to get a push from carriers eager to promote their significant investments in next-generation technologies, Apple doesn't need to risk a suboptimal 4G experience by rushing an inferior LTE-friendly model to the market.

All things considered, the report makes a lot of sense. If you're waiting for a 4G-ready iPhone next year, it looks like you'll be out of luck.

Read fellow Fool Tim Beyers' argument that Apple should release a 4G iPhone for Sprint.

Verizon and Apple's steamy affair heats up
After reports broke last week that the iPhone is headed to Verizon, the two companies took another step to expand their relationship. On Thursday, Apple announced the iPad will go on sale at Verizon stores. The effect on Apple shouldn't be too significant, though, since Verizon won't even sell a 3G version of the device. Instead, its models will use small "MiFi" gadgets to connect to 3G. But the news is still significant, because it validates reports of the strengthening relationship between the two companies.  

Read more analysis on the iPad's upcoming Verizon debut.

That's it for this week's Apple news. If you're searching for other opportunities in the mobile world, we've created a special report featuring a mobile giant that The Motley Fool has put its own money behind. Click here to get instant access to this report right now.

Interested in reading more about Apple? Add it to My Watchlist, which will find all of our Foolish analysis on this stock.

Eric Bleeker owns shares of no companies listed above. Microsoft and Sprint Nextel are Motley Fool Inside Value recommendations. Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, and Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (8)

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 16, 2010, at 1:52 PM, uc22 wrote:

    Eric,

    Your article was pretty fair and balanced but I question why you think MS doesn't have a community of developers that rival IPhone and Android. I understand the platform is new so I would also assume it needs time to build ... but lets not forget that .NET developers far outnumber the IPhone and Android community and many in those communities are in fact .NET developers. If this phone is reasonably successful it will have no problem attracting devs

  • Report this Comment On October 16, 2010, at 2:10 PM, TMFRhino wrote:

    Hey UC22,

    That's true, Microsoft's done a great job with the developer community in recent years. Or maybe my opinions a bit tainted from having worked there with developers :). I'd agree the problem isn't that there's plenty of developers with the right tools out there, its convincing people the platform has the critical mass that developing for it is worth their time.

    Then again, with 250k+ apps in Apple's app store, if I was a developer I might see this as an opportunity to be featured more.

    Thanks for posting!

    Best,

    Eric Bleeker (TMFRhino)

  • Report this Comment On October 17, 2010, at 5:43 AM, gslusher wrote:

    "The blowout success of Motorola's (NYSE: MOT) Droid ..."

    In the first 74 days, the Droid sold 1.05 million. That's a bit more than the FIRST iPhone (1 million--that's why people picked 74 days), but, of course, the Droid was Motorola's THIRD Android phone, so it shouldn't be compared to the original iPhone. (It was also 2.5 years later.) To put things into perspective, the iPhone 4 sold 1.7 million on the FIRST WEEKEND. THAT is "blowout success."

  • Report this Comment On October 17, 2010, at 7:59 AM, TogoP wrote:

    Unnecessarily downbeat on the lack of CDMA/LTE support - this jaundices the article.

    3 years (?) on still no iphone that supports this but you seem to expect that a multi-device platform such as wp7 should have it from the off? They've promised in 2011 - I can't see the problem.

    The first release is correctly picking its battles - providing support for 38 US city's fringe technology ain't a defining one so stop carping...

    As Eric points out - who would want to be a fart-app developer amongst 250,000 similar offerings - the first mover opportunity is there for those that can grasp it. MS is in for the long haul, so saddle up!

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