Microsoft's Big Week

What a week.

Last week saw some pretty major headlines from some sizable companies. Google (Nasdaq: GOOG  ) kicked things off Monday with its $12.5 billion acquisition of Motorola Mobility (NYSE: MMI  ) . Then later in the week Hewlett-Packard (NYSE: HPQ  ) announced a fundamental shift in its business alongside its earnings announcement. Hiding behind the headlines, Microsoft's (Nasdaq: MSFT  ) Windows Phone 7 actually came out as an inadvertent beneficiary to the events.

Just trust Google
I touched on this last week, but let's take it a bit deeper now that the dust has settled. Android OEMs like LG, Samsung, and HTC have all openly voiced support for "Google's commitment to defending Android and its partners." Yet behind closed doors and with PR talk aside, these "partners" have some pretty important questions to answer.

The most important question: Will Google betray us? The company has proclaimed that Motorola won't get preferential treatment, but it will need to demonstrate this commitment to the openness of the platform. Google will have to tread lightly as the OEM partners-turned-competitors watch Big G's moves with bated breath.

In the meantime, it could be a strategic and costly error to disregard this notion altogether and not have a backup plan. There's no reason to dump Android prematurely, but it never hurts to have a lifeboat just in case things turn sour. Currently, Samsung makes 28 Android phones compared with only one Windows Phone 7 device. HTC is a little bit more diversified, offering 19 Android phones and six Windows phones, with even more on the way.

These OEMs have a lot riding on Android, maybe even too much. Even if Google remains true to its word and Android remains purely open, just the possibility of Motorola getting special treatment from its rich parent should motivate the other manufacturers to expand their Windows Phone offerings. It's a possibility that simply can't be ignored.

One of Windows Phone's biggest shortcomings is its lack of developers to provide a thriving ecosystem. That was until ...

How do you discontinue operations and optimize value at the same time?
Now that HP has given up on webOS hardware because of dismal sales and it's anyone's guess about the future of the software, Microsoft has swiftly jumped on the opportunity to win over some developers. Mr. Softy is offering free phones, tools, and training to published webOS developers who feel left out in the rain by HP's new direction.

The offer was tweeted by Microsoft's Senior Director of Windows Phone 7, Brandon Watson, last Friday and has already garnered more than 1,000 interested developers. This might prove to be a catalyst to beef up the Windows Phone ecosystem, which has failed to take off so far.

Although webOS didn't have that many developers to begin with, which contributed to the TouchPad's downfall, combining forces will still help reinforce Microsoft's ranks of developers.

What about Microkia?
Microsoft and Nokia (NYSE: NOK  ) have been pretty cozy lately. Even if the other OEMs weren't too keen on Microkia's relationship, they're probably less fond of Googorola. Google and Motorola's combination includes some inherent conflicts of interest, unlike Microsoft and Nokia.

After one week, Windows Phone now has much more promising prospects for more manufacturing partners and app dev elopers. The last piece of the puzzle is whether there will be buyers. The operating system has a long way to go before it can make a dent in the smartphone wars, but its chances just got a whole lot better.

With recent Gartner figures showing Microsoft's smartphone market share dipping to a measly 1.6% in the second quarter from 4.9% a year ago, the battle with Android and Apple's (Nasdaq: AAPL  ) iOS will be uphill -- and steep.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Google, Apple, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Microsoft, as well as creating a bull call spread position in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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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 August 23, 2011, at 4:29 PM, baldheadeddork wrote:

    One minor correction: It's accepted as fact that the WP7 ecosystem hasn't taken off so far, but that has never been supported by the data. WP7 has been released for nine months and it's matched the app availability for iOS at the same points in its first year. WP7 has more apps than Android for its first year.

    Also, there's a very strong case to be made that total app count isn't a relevant metric anymore. There might be nearly a half-million apps in the Apple App Store, but the vast majority of downloads are for maybe one percent of those.

  • Report this Comment On August 23, 2011, at 5:54 PM, techy46 wrote:

    You're missing the point it's not all about Microsoft and Nokia. It's all about Microsoft and Windows 8. The Microsoft BUILD Conference on 9/16-18 has been sold out for over a month. They've release a Windows 8 blog http://blogs.msdn.com/b/b8/ hosted by Steven Sinofsky. They've got 35 teams of 40 developers, 1400, working to release a touch based Metro UI for all devices including tablets. Once that's available WP7.5 Mango will become WD8, WN8, WP8, WT8 and things will become relly interesting for consumers and enterprises.

  • Report this Comment On August 23, 2011, at 7:15 PM, chilero wrote:

    I keep hearing that repeated theme, not just from the Fool, about how WP7 has failed already.

    They have hit or are very close to 30,000 apps which compares very well to the rate of growth for both Apple and Android as mentioned above. Once 'themes' are elimated from Blackberry the app WP7 ecosystem is set to pass Blackberry, or perhaps already has.

    Marketshare is still weak in the US at about 2% but in Germany WP7 now has 7% (double RIM`s) according to market research company Kantar World Panel. These numbers are only for WP7 and do not include WinMob.

    This fall brings Mango, new phones, new OEMs, new apps that were waiting for Mango, new markets, expanded services that were previously USA only and the beginning of the Nokia effect.

    Where the ecosystem is currently failing is at POS where vendors typically push the phone they own which is either Android or Apple.

    One Fool on Marketfoolery predicted Mango phones may be the sleeper hit of the holiday season. I can`t remember who said it but I think it was Charlie.

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