Is This Microsoft's Last Chance to Beat Apple?

April 8 is going to be a big day for Microsoft (Nasdaq: MSFT  ) .

It's the day when AT&T (NYSE: T  ) will begin selling Nokia's (NYSE: NOK  ) Lumia 900.

If that doesn't seem like an important event for the world's largest software company, consider that this will be Microsoft's best chance to matter in a world where Apple (Nasdaq: AAPL  ) and Google's (Nasdaq: GOOG  ) Android appear to be running away with the smartphone market.

Nokia's flagship phone is powered by Microsoft's fledgling Windows Phone operating system. Microsoft is so adamant on making its mobile platform stick that it has struck a deal with Nokia that will reportedly send billions to the Finnish handset maker in exchange for rallying around Windows Phone.

Microsoft and Nokia are joined at the hip here. Now they just hope that that Lumia 900 is hip here.

Windows to the world
There have been a few earlier Lumia models, but this is really the model that it will all come down to. Nokia is packing plenty of specs into the smartphone, and by landing a subsidy through AT&T as the exclusive carrier folks will be able to buy the high-end 4G LTE device for just $99.99 with a two-year contract.

There's plenty riding on this, and Nokia and Microsoft are hoping AT&T will lead by example. Reports indicate that Nokia is paying $25 million just to give AT&T employees Lumia 900 handsets as their company-issued smartphone. The plan is for employees to be well-educated about the product. The obvious in-store visibility is a sweet bonus.

The rub here is that it will ultimately be the consumers who decide. If they're too resistant to the tiled layout of Windows Phone or if the bulging app store marketplaces at Apple and Android are too much to overcome, it won't matter that the Lumia comes at a great price with sweet specs and a strong marketing push.

Gunning for the bronze
Microsoft and Nokia know that they're unlikely to catch up to Apple and Android as the smartphone platform of choice. However, Research In Motion's BlackBerry is certainly vulnerable. If Microsoft is even mildly successful here, it may not be long before it overtakes a meandering BlackBerry for the third-place slot.

Settling for bronze would be an odd thing for two companies that are used to being on top. Microsoft remains the world's biggest software company, and Nokia is the undisputed global leader in handsets (though not smartphones).

Nokia and Microsoft are calling. Will stateside shoppers be brave enough to answer? The question will begin to be tackled on April 8.

Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Google, Nokia, Apple, and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.


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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 March 27, 2012, at 2:15 PM, baldheadeddork wrote:

    Quoting myself because it works here, too...

    The $100 price on the Lumia 900 on AT&T isn't likely to move the needle for either WP7 or Nokia in the US. It might even be counterproductive if consumer looks at the price and immediately decides it must mean the phone is cut rate.

    But the US is no longer a major growth market for smartphones. We've hit the saturation point. Over half of American adults now have a smartphone and the rate of growth is expected to slow significantly from here on out. That means whatever WP7 gets in the US market will come primarily through captures from Apple, Google and Blackberry, and that isn't going to be easy.

    The really important number with the Lumia 900 is $450. That's the unsubsidized retail price and it's hundreds of dollars less than the retail price of an iPhone (or top-tier Android or WP7 phone) in every other market on earth.

    Three or four hundred dollars will probably get some traction in Europe but it's going to be a massive advantage in the BRIC emerging markets. That's the biggest smartphone growth markets in the coming decade and it's where Nokia is already the favorite phone brand by a huge margin.

    And the Lumia 900 is just the opening salvo. Microsoft told Bloomberg last week their manufacturing partners would " “definitely” offer devices in the price range of 1,000 yuan ($158)" That's one-fifth the retail price of an iPhone in China.

  • Report this Comment On March 27, 2012, at 3:38 PM, lucasmonger wrote:

    So the real question in my mind is how does the Lumia 900 compare to the other $99 smartphones out there like the year-old iPhone 4? If it blows away the iPhone 4 in features and capabilities, they Microkia might have a chance to get in on price. My gut feel is that it's the Lumia is little, too late... Apple & Google now own the smartphone market and it would be difficult for someone else to emerge on top without something so innovative and different that people all abandon the nearly-all-touch-screen form factor.

  • Report this Comment On March 27, 2012, at 11:20 PM, techy46 wrote:

    Nokia's Lumia 900 is just the beginning for the US, not the finale. Tomorrow, March 28, Nokia will release Lumia 610c, 710c and 800c in China along with China Mobile. China Mobile has 650 million subscribers, AT&T has 96 million, Verizon 94 million. Microsoft will be releasing Windows 8 this fall with tablets from everybody using both ARM and X86 and WP8 super phones to follow. The US has 33% smartphone use vs China's 10%. The US has 10% tablet use. The mobile wars are just beginning and Andrroid and iOS look dated with theie iconic wallpaper.

  • Report this Comment On March 28, 2012, at 10:47 AM, propagandix wrote:

    The only way to update the OS on the windows phone is through a PC. This seems crazy to me as many people will be buying these phones to get away from the need for a PC as well and many people in the emerging markets who they are targeting these phones at don't have PC's either. Also considering that it is predicted that in the future PC's will give way to smartphones and tablets how will anyone ever be able to update their software?

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