Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Next Big OS Battle: Android vs. Windows Phone

Take a closer look at IDC's latest data on the smartphone market and you'll find several interesting tidbits. For me, nothing is as interesting as the Android vs. Windows Phone battle at the low-end. Apple (NASDAQ: AAPL  ) , as it tends to do, is staying above the fray.

How will it all play out? No one can be 100% sure, but my personal belief is that Microsoft (NASDAQ: MSFT  ) needs to switch its strategy or risk paying a dear price to win over customers who might otherwise gravitate to Android.

The world's most dangerous robot

Again, look at the data. No one matches up with Google  (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) in this market. Android vs. Windows, iOS, BlackBerry ... they're all losing share, and in Q2, only Apple shipped more devices year-over-year:

Android is dominating the global smartphone market. Source: IDC Worldwide Mobile Phone Tracker, August 14, 2014. Figures may not be exact due to rounding.

Notably, Apple took a 3% hit on iPhone selling prices in the second calendar quarter. But at $561.06, the iEmpire's average handset wasn't exactly priced like a cut-rate Android device. A May report from IDC pegged the average 2014 selling price for Android handsets at just $254, dropping to $215 by 2018. No wonder so many opt for Google's OS.

A squishy strategy for Mr. Softy

Microsoft is caught in a different position. Windows Phone is billed as the functional equivalent of iOS, with the talking assistant to prove it, yet Mr. Softy also sells a variety of lower-end phones by virtue of its acquisition of Nokia's handset business.

Declining share and lower shipments suggests the mix is confusing to buyers. CEO Satya Nadella touched on the need for developing a more consistent message in a July strategy memo to employees: "We will responsibly make the market for Windows Phone, which is our goal with the Nokia devices and services acquisition." [Emphasis added.]

How much investment amounts to responsibly making the market isn't yet clear. If IDC is right, there's plenty of work to do. The researcher's study of the market found that 61.4% of Windows Phone handsets sell for $200 or less off-contract vs. 58.7% for Android handsets: 

Look elsewhere for a catalyst

As you might expect, Microsoft isn't making much from Windows Phone right now--only $54 million on $1.985 billion in fiscal 2014 hardware sales, to be specific. That's a gross margin of just 2.7%. Add in marketing, distribution, and related operating expenses, and it's likely Mr. Softy is selling most handsets at a loss. Nadella's careful wording about Microsoft's future bets on Windows Phone make sense when you look at the financials. And yet he isn't ruling out handsets altogether. Instead, he sees them as platforms for selling productivity software.

"Going forward, all the devices will be created with an explicit purpose to light up our digital work and life experiences," Nadella said in the fourth quarter earnings call held last month.  "Good examples of this today are what we are doing with Surface Pro 3 for note-taking and PPI for meetings. You can expect to see this type of innovation in our hardware, including phones."

Is that a retreat? Whatever it amounts to practically, Nadella is apparently no longer interested in a straight-up Android vs. Windows Phone war. Given the toll it's already taken, I'd say that's welcome news for investors.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (1) | Recommend This Article (0)

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 19, 2014, at 5:29 AM, melegross wrote:

    The headline is misleading. Android has a worldwide share of 85%, while Win Phone has 2.5%.

    A truer headline would have been;

    Will Win Phone survive?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3073511, ~/Articles/ArticleHandler.aspx, 8/29/2015 9:06:55 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Tim Beyers

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at or send email to For more insights, follow Tim on Google+ and Twitter.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:00 PM
AAPL $113.29 Up +0.37 +0.33%
Apple CAPS Rating: ****
GOOG $630.38 Down -7.23 -1.13%
Google (C shares) CAPS Rating: ****
GOOGL $659.69 Down -8.27 -1.24%
Google (A shares) CAPS Rating: ****
MSFT $43.93 Up +0.03 +0.07%
Microsoft CAPS Rating: ***