Next Week Is It For This Company
Callum is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The Smartphones Have Arrived
The smartphone industry remains one the most robust markets in the world right now; with IDC predicting that this market will grow by 33% this year, from 494 million units in 2011 to 660 million in 2012. For the third quarter Canalys sees smartphone growth coming in at 44%, even with the global slowdown. Two companies have been able to grab the most market share in this sector. Google’s (NASDAQ: GOOG) Android system controls 75% of the market (according to IDC) and Apple’s (NASDAQ: AAPL) iPhone controls 15% of the market. But a sleeping giant maybe be able to get in the mix. This giant of course is Microsoft (NASDAQ: MSFT).
HTC Windows Phone 8X and the Lumia 820/920
Now, don't get me wrong, I know for the past decade everyone has been saying that "the next big thing is on its way" with Microsoft and that it is just around the corner. But Microsoft venturing into the smartphone space, regardless of if you think they will succeed on not, is important to follow. On November 13, HTC's new Windows phone and Nokia's (NYSE: NOK) new line up of Lumia phones are being shipped. Now, one big thing that will help out MSFT, NOK, and HTC is that the iPhone 5 wasn't the next big thing. Sure, a lot of units will be shipped, Apple will make a lot of money, and shares will probably rebound out of their lows, but it didn't have that wow factor. That's why you saw Nokia shares advance the day after the iPhone 5 was launched. There is now a possibility for a 3rd party (Microsoft) in this competitive field. Cnet.com gives the HTC Windows Phone 8X high marks and says it would be a great buy for anyone discouraged with iOS or Android, and it also likes the Lumia 820/920. For all three phones it gives it the highest marks in design, citing the sleek curved back and rounded edges. Cnet was impressed with the new OS and cites how its camera software is better than the competition. The important thing to take away is that these phones are comparable to the iPhone 5 and the Samsung Galaxy S3. One thing that the iPhone 5 doesn't have but the Windows Phones do (as does the Samsung Galaxy S3) is an NFC (near field communication) chip, which is what allows you to use your phone as a credit card or to use any app that involves scanning something. The possibilities for NFC technology is limitless, and that could be the tipping point for consumers who aren't wowed with the new iPhone launched, but aren't sure if they should go try out a new entry into the smartphone space.
Next week several Windows 8 phones are going to hit the shelf and consumers will be offered an alternative premium device. Microsoft had some (they gained a tiny bit of market share) success with Windows 7, but it didn't take off like Steve have planned or gain any major traction with consumers. Right now (according to Canalys) Windows has 3.2% of the global market share for smartphones, up from 1.2% a year ago. Microsoft won't go bankrupt if this is a flop, but its stock price will continue to stay in the doldrums. One added benefit for Microsoft if its phones sell well is that Bing will do better as well. Bing is tightly integrated into the Windows Phones, and the number of searches will go up once these phones go on sale. With the iPhone 5 not having the wow factor it wanted, I think Microsoft has a chance to take up some market share. It launched an aggressive ad campaign to promote its Windows Surface and it is using its cash hoard to attract developers to build up its app offering.
There has been a lot of talk around Microsoft and whether or not Windows 8 will be a disrupting force or a sad joke. Now the time has finally arrived to see if consumers take to the new devices. I'm cautiously bullish on these phones because they look very nice, are new and refreshing, the iPhone 5 didn't wow, and I feel that analysts are way too bearish on this potential offering. Any good news with Windows 8 would be great news (especially for Nokia). But you also have to take into consideration brand loyalty with iOS/Android and the Samsung Galaxy S3 selling very well. Optimistic, but only time will tell if Steve's plan pays off.
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callumturcan owns shares of Microsoft. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. 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.If you have questions about this post or the Fool’s blog network, click here for information.