Will Microsoft Now Get the Respect It Deserves?

Peter is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Even though Microsoft (NASDAQ: MSFT) is the force behind Nokia’s (NYSE: NOK) improving smartphones sales due to the Windows Operating System, it is Nokia’s stock that is up more than 130% for the last six months with Microsoft’s down almost 2% for the same period.

Obviously, Microsoft is a far bigger company than Nokia with a market capitalization about fifteen times as large, but the success of the Lumia smartphone could be adding more to the share price of Microsoft in the future for the damage it does to competitors such as Apple (NASDAQ: AAPL), Research-in-Motion (NASDAQ: BBRY), and Samsung.

Both Apple and Research-in-Motion are very vulnerable to Windows smart phone sales. While Research-in-Motion has rebounded sharply, up almost 140% for the last half year, if the new Blackberry 10 does not prove to be a success, it will be a disaster for the company. The month of February will be critical for Research-in-Motion as the Blackberry 10 was recently unveiled.

Apple is certainly not in as precarious a position as Research-in-Motion. The iPhone is its biggest money maker, however. That Apple is down more than 20% for the last quarter reveals its vulnerability to increased competition. Due to the success of the previous iPhones, there have been analyst reports that Apple would be a $1000 stock. It is now trading under $460, down 26.33% for the last quarter.

What makes the future for Apple even gloomier is that Nokia with the Windows smartphone is strong where Apple is not: emerging market nations. That is why there are reports that Apple will be bringing out a cheaper version of the iPhone, as it needs to increase sales in the developing world. Nokia is already strong in nations such as India, Indonesia and others with its feature phones and lower-end smartphones.

That position gives Nokia and the Windows smartphone a tremendous competitive advantage over the iPhone. Nokia cannot go toe-to-toe with Apple in terms of financial resources, but Microsoft certainly can. If this were a boxing match, Nokia and the Windows smartphone have certainly won the first round.

Apple is too big to knock out, however. But Research-in-Motion is not. Research-in-Motion is putting everything into the launch of the Blackberry 10: it has even bought advertising time for the Super Bowl game this Sunday. When Nokia put out the Lumia 900 last April, it was a debacle. But Nokia recovered from that, due in large part to its partnership with Microsoft. It is difficult to see how Research-in-Motion can recover if the Blackberry 10 falls.

Should the Blackberry 10 stumble and Apple continue to stagger, that is a huge victory for Microsoft and the Windows smartphone. Certainly, Samsung and the Droid from Google's Motorola Mobility have much to do with the woes for Apple and Microsoft, but those two tech behemoths were never threatened like Nokia. By sticking with Nokia, Microsoft has counterpunched very well against Apple and Research-in-Motion.

While there are other companies selling the Windows smart phone other than Nokia, its rebounding share price demonstrates its appeal the best. If Research-in-Motion collapses and Apple continues to crater, the success of the Windows Phone from Microsoft will be best viewed in the declining share price of each. Perhaps the share price of Microsoft will then rise in recognition of its improved market position in the smartphone sector and reflect the break through technologies waiting for their market launch developed by Mircosoft's R&D department.


Fool blogger Peter Harengel does not own shares in any of the companies mentioned in this entry. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple 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!

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