Microsoft (Nasdaq: MSFT ) may be the best one-trick pony ever to grace the stock market. Well, make that a two-trick pony; both Windows and the Office suite of productivity software have been unqualified hits.
Now, there may be a third success. Peter Knook, head of Microsoft's Mobile and Embedded Division, recently told a German newspaper that the number of global devices operating on the Windows Mobile platform "doubled to six million last year," Reuters reports.
And that may be just the beginning, according to Knook. He claimed that Mr. Softy will double Windows Mobile sales again during 2006, and throughout the "coming years." I have my doubts about that claim; it just sounds too much like hyperbole.
Yet researchers seem to agree with Knook. IDC, for example, says that the overall market for converged devices such as smartphones will expand from 7.3 million units shipped last year to 63 million units shipped in 2010. That's a 54% compound annual growth rate.
What's more, IDC says that Windows Mobile will be the fastest-growing mobile platform during that period, expanding to account for 32% of converged devices shipped in 2010. That could be a woefully optimistic prediction, of course. But I have to ask: What if IDC is right?
Think about that for a minute. If IDC's analysts are even in the ballpark, then wouldn't the smartphone become the new PC (in terms of the great growth ahead)? And wouldn't that make the BlackBerry the new Macintosh? I ask because, as master investor Warren Buffett has proved, the secret to huge gains in stocks is to cheaply acquire firms with defensible franchises.
Research In Motion's (Nasdaq: RIMM ) "CrackBerry" franchise is hardly defensible. First, a patent assault nearly shut down its network last year. Second, its closed system demands continuous software improvements as hardware makers such as Palm (Nasdaq: PALM ) , Nokia (NYSE: NOK ) , and Motorola (NYSE: MOT ) improve their phone designs. And third, the key advantage of the device -- on-demand email -- has proven widely replicable.
And what of price? RIM's shares trade as if the firm will achieve 28% earnings growth over the next five years. That's certainly possible, given IDC's projections. But any loss of market share will all but ruin its chances to smile on investors from somewhere above today's lofty perch.
That brings me back to Microsoft. Between delays in Vista and an ugly challenger to the iPod, Mr. Softy's stock looks about as sexy as Steve Ballmer in spandex. But if I'm forced to choose between that and the burlesque show that is RIM's lofty valuation, I'll take the spandex every time.
Dial 'F' for related Foolishness:
- Will Larry and Sergey deliver the haymaker to Mr. Softy?
- Apparently, all is now going according to plan for Microsoft.
- The CrackBerry's on call. Want to listen in?
Fool contributorTim Beyersstill owns a Treo 600, which he beats up every day. Tim owns shares in Nokia. Get the skinny on all the stocks he owns by checking Tim's Foolprofile. The Motley Fool'sdisclosure policyis never on hold.