Microsoft's Gaining Smartphone Market Share

When Nokia (NYSE: NOK  ) announced its Lumia running Microsoft (NASDAQ: MSFT  ) Windows Phone on Nov. 28, 2011, no one really knew whether the phone would be a success or not. Now, slowly but surely, the phone is gaining meaningful market share in the fast-growing smartphone market. Two recent reports, in particular, uncover surprisingly bullish data for Nokia's Lumia.

An Apple and Google world
During the first 12 months of the phone's existence, Lumia sales were pretty insubstantial. This changed, however, when Nokia announced 4.4 million units sold in the fourth quarter. That figure was an increase of 51% from the prior quarter.

When we consider the sales volume of its competitors, however, these numbers seem less impressive. Apple (NASDAQ: AAPL  ) , for instance, sold 47.8 million iPhones during the corresponding quarter. Samsung sold a whopping 63 million smartphones. Most of the latter devices, of course, use Google's (NASDAQ: GOOGL  ) Android for their mobile OS. When it comes to monster sales, Apple and Samsung are on top.

Together, Google and Apple make up about 90% of top smartphone platforms in the U.S., according to a study published last week by comScore that measures installed user base of smartphone platforms. So far, the smartphone market is still an Apple and Google world. So Microsoft's place in the highly competitive market may seem small, but the company is vying for third place.

Two surprising reports
comScore revealed that Microsoft earned the No. 4 spot among smartphone operating systems in the U.S., with a 3.2% share in February compared to 3% in November. BlackBerry's (NASDAQ: BBRY  ) market share, on the other hand, fell substantially -- from 7.3% in November to 5.4% in February. The change in sales is likely even more drastic. As MacRumors notes, "comScore's data tracks installed user base rather than new handset sales, which means it is more reflective of real-world usage but slower to respond to shifting market trends than some other studies."

A report from Net Applications, published last Wednesday, revealed that mobile Internet traffic generated by Microsoft's Internet Explorer is already more than double the traffic from BlackBerry's browser. Microsoft claimed 1.99% market share while BlackBerry's share dipped to just 0.91%. Perhaps much of BlackBerry's installed base of smartphones is sitting around unused.

Microsoft should claim third place
Apple's iOS and Google's Android still dominate the smartphone market, but Microsoft is on pace to officially claim the third spot. Recent reports of Lumia success in China -- one of the world's fastest-growing smartphone markets -- indicate that Microsoft has an even better chance of attaining meaningful market share.

Is it time to bet big on Microsoft in the smartphone market? Probably not. But Microsoft is poised to potentially pull off a surprise. For now, investors should view Microsoft's small success in smartphones as a possible upside bonus, though its continued ascent far from certain, given Apple and Google's dominance.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


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  • Report this Comment On April 09, 2013, at 5:37 AM, leslyharrys wrote:

    If BBRY users don't use their devices so much, that say all about the userinterface!

    Nokia an Windows Phone 8 is by far the most superior OS. it wins from iOS en Android (very very bad software) and BBRY (to complicated OS)

  • Report this Comment On April 09, 2013, at 5:43 AM, leslyharrys wrote:

    Windows Phone 8 and Nokia are going to make the smartphone devices integration with PC or cloud software solution. Surfaces full Windows 8 will eventually kill al other Tablets. Whats the use of a Ipad, Android Tablet, if phones and phablets are much better in doing that job. And when a tablet is a real computer...everybody want one.

    Though Apples cloud solution are doing well as well, but Android is hopelessly old fashioned, to much of everything and hardware devices of Samsang are really low quality! That is one of the reason Windows Phone 8 is rising. The indestructable NOKIA! But serieusly I used all sytems and Windows Phone 8 is the most practical, second is Apple.

  • Report this Comment On April 09, 2013, at 9:25 AM, leslyharrys wrote:

    And, will any Wallstreetcop catch me or even BBRY kill me????

    Ain't I free to say what I really ment and besides it is from experience in praktisch using devices longer then ten minutes! It's is an opnion based on real userexperience

    Leslyharrys

  • Report this Comment On April 09, 2013, at 12:00 PM, RandomMeaning wrote:

    I'm wondering why the Windows 8 proponents are the ones who have spelling errors. Not all of them, but enough to be noticed. This is the internet so mistakes happen, particularly grammar errors, and I'm certainly not the epitome of perfection, nor am I trying to make anyone perfect. But, as I said, this is the internet. So, how come the Windows 8 guys don't have spell check? I mean really, why take advice about technology from a person who's device can't handle something as basic and easy as automatic spell checking?

    "Surfaces full Windows 8 will eventually kill al other Tablets."

    Really, seems to me Microsoft started working on tablets over 10 years ago. Kudos to them for being first to market all those long years ago. But I think "Surfaces full Windows 8 will eventually kill al other Tablets" is reaching. Current data just doesn't support that.

    From PC World:

    Microsoft's Surface RT tablet has a sales problem, according to new analyst estimates. Despite the almost omnipresent Surface RT advertising blitz that has been blanketing television screens for months now, IHS iSuppli believes that only 680,000 to 750,000 of the tablets have sold since the slate's October 26 launch, while IDC released a report Thursday stating that Microsoft only shipped 900,000 Surface RT tablets to retail.

    If true, this is disappointing news for Microsoft. More worrying than the sales figures, however, is IHS iSuppli's report of "very high" return rates, which could hint at even greater concerns about Windows RT's very viability as a platform.

    IHS iSuppli analyst Rhoda Alexander didn't disclose detailed return rate estimates during her chat with CNET, though she did say, "It seems to be linked in a lot of cases to a steep learning curve of the [Windows 8] OS—which is not necessarily intuitive."

    http://www.pcworld.com/article/2026781/high-surface-rt-retur...

    But perhaps you were referring to the Surface Pro. Here's a recent article from The Register:

    Consider, though, that Microsoft launched the Intel-powered Surface Pro model running Windows 8 in February. That version was widely expected to broaden the appeal of the line to include power users who were put off by Windows RT on the ARM-based model, but it looks like that hasn't happened.

    Bloomberg's sources claim that Redmond has shifted 400,000 Surface Pros so far – that's fair enough. But if total sales of the entire Surface line are more or less the same as they were during the previous quarter, that means nearly all of the Surface Pro sales came at the expense of Surface RT sales.

    That's lousy news indeed, given that Surface RT was already performing worse than Microsoft and many analysts expected.

    http://www.theregister.co.uk/2013/03/15/surface_pro_sales_di...

    Personally, I think Microsoft getting into the highly competitive, low margin hardware business was an unnecessary strategic mistake. They were doing quite well in the high margin software business. Instead they've alienated partners for negative returns. If they wanted to actually increase revenues and profits, why not do the unthinkable: sell Office and other Microsoft software on iOS, Android, and Blackberry.

    Gasp! Heresy!

    But it actually makes good business sense. They already dominate desktops and laptops. That's not likely to change. Why not be the leading provider of software to the mobile world too? Lots of profits, low risk.

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