Why Microsoft's Smartphone Stands a Chance Without Google’s Support
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Google (NASDAQ: GOOG) recently said that it would not be making an app for Windows 8 or Windows Phone 8. Engadget posted an editorial about Windows Phone without Google, and the author could last no longer than 3 days before needing to go back to an Apple (AAPL) iPhone device. Three years after Windows Phone 7 was released, the device still does not have an official YouTube app (apps like Metrotube, Supertube, Tube Pro, Prometube, or Megatube exists). For Google-based browser support or cloud storage, support for Google Chrome or Google Drive does not exist.
The uphill battle Microsoft faces for building market share in the smartphone platform may depend on Google. Google already builds critical apps on the maps Apple iOS platform, including a maps app and an email app. Despite heavy advertising spending by Microsoft for Windows Phone, its fate may indeed depend on Google support the platform.
Unfortunately, Clay Baver, a product management director at Google Apps, said:
"We have no plans to build out Windows apps. We are very careful about where we invest and will go where the users are but they are not on Windows Phone or Windows 8. If that changes, we would invest there, of course."
Microsoft (NASDAQ: MSFT) could conceivably succeed in growing Windows Phone without Google’s mobile app support. The company provides Sky Drive, Outlook, and Office on the platform. The Google equivalent is Google Drive, Gmail, and Google Docs. The lack of support does not help Microsoft, but it is not critical for growing the Windows Phone platform. Users who take the initiative to transfer their accounts to Microsoft would not have difficulty in doing so. They would also benefit in getting the whole Windows experience on the cloud.
As Microsoft moves to unifying its ecosystem centered on its Bing search engine, the company has the potential to scale developer-written products across its different channels. Software developers need only write a program once, for one device, and the code may be reused elsewhere with minimal code change (at the user-interface level). For example, a program designed for Windows Phone 8 could work on Windows 8 desktop or on the Surface tablet.
Windows Phone users also have Nokia Drive as an alternative to Google Maps.
In the short-term, the rapid innovation in the Android ecosystem and competitive pricing of these devices are the greatest concerns for Microsoft at this time. The Nexus 4, priced at just $299 no-contract, runs the latest Jelly Bean operating system variant. Google Now, which gets users the right information just the right time, showcases Google’s strength in search at the forefront of the user.
Investors reduced their expectations for growth in Microsoft shares. After the launch of Windows 8, Windows Phone 8, and Surface RT, shares dropped below $30. The company is now valued at 9 times forward profits, compared to 20 times forward profits for Google. Google’s decision not to support Microsoft limits options available for users. Users are now being forced by Google to transfer their entire online profile to the Microsoft ecosystem, or to use only some of the cloud-based offerings on the Windows Phone 8 platform. Given that demand for the device is improving, investors should not count Microsoft out. Value-investors patient enough to wait for Microsoft to build its user-base will be rewarded over time.
chrispycrunch has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and Microsoft. Motley Fool newsletter services recommend 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!