Microsoft Is Revving Up
Rekha is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Microsoft that had been deemed "the evil empire" has realized that it is time it should try and rev up its business and reputation that had seen a set back. August 23, 2012 saw the company unveil a new corporate logo which seemed to herald the new era for the company. Microsoft plans to release new versions of nearly all its products and promises that they wont be mere reimaging of their popular products. Wednesday saw Nokia (NYSE: NOK) and Microsoft (NASDAQ: MSFT) taking the veil off the company’s most powerful smartphone, which could prove to be their last chance to reclaim the market lost to Apple, Samsung and Google (NASDAQ: GOOG). Both companies were highly consumer focused. Nokia demonstrated on its latest release, Lumia phones and their facilities such as better cameras and mapping tools. Taking the cue Microsoft also demonstrated the ease of usage and other facilities such as location based apps. This clearly shows that they are pitching for tech savvy people.
Microsoft and Nokia rest their hopes on the new Lumia to be a “potent weapon in the global industrial war.” But the analysts differ, they commented that the device is solid with differential features but it is not very impressive. The new launch does not seem to have benefited the company much as Nokia’s share experienced a fall of 15% shortly after the unveiling.
Microsoft hopes that Lumia 920 and 820 running on the latest Windows phone operating software could give a run to Apple’s iOS and Google’s Android to become third mobile platform. But if the new phones fail to impress the consumers it would prove a serious blow to Microsoft in its attempt to get a stronghold in the market. Ben Wood, the head of research at CCS Insight said that both Microsoft and Nokia “will have to spend eye-watering sums on the marketing and offer new phones at aggressively low prices.”
Success of Lumia sales would signal success for Microsoft too as it would convince more smartphone makers and carriers to support its Windows 8 software. Samsung became the first to announce a smartphone running Windows 8. Since Windows phone support only 100,000 apps compared to 500,000 for Android or iPhone it may become the reason for its limited success.
Can Microsoft rely on Nokia’s new launch to bring back its past glory? Not very sure. In the past eighteen months Nokia has lagged three billion euros in operating losses and was forced to cut 10,000 jobs and pursue asset sales. Windows phone has captured 3.7 percent of the global smartphone market whereas Android phone and Apple capture 68 percent and 17 percent respectively. Moreover September seems to be raining smartphones with Amazon.com unveiling Kindle Fire tablets and Apple formally announcing September 12 to be the date for unwrapping it’s much awaited iPhone which the analysts believe would be a runaway bestseller this holiday season. Samsung also plans to sell its own Windows phone by next month. Samsung’s Galaxy S111 has already been a strong seller. If the customers rush to buy phones before the injunction on US sales due to the recent patent dispute, the company may benefit more.
Google’s new acquired Motorola has unveiled its latest Android devices. All three new RAZR launched by Motorola will work on Verizon’s LTE network and will be able to update to the latest JellyBean update from Android by the end of this year. Google’s Android mobile operating system had jumped ahead in the smartphone market but it took a hit when Samsung lost to Apple in patent infringement dispute. The company’s share closed down at $680.70 on Wednesday.
Nokia or Microsoft must first find favor with consumers who have so far shown little enthusiasm for smartphones with Windows software. Wednesday’s unveiling showed that Microsoft and Nokia had been consumer focused when they should focus more to corporate customers who have been relying heavily on RIM’s BlackBerry devices. The loyal customers of BlackBerry will have to wait until next year for something new. This is a perfect time to strike as consumers have got tired of waiting, which in itself is the good news for Microsoft. Some have already given up hope and are vouching for Apple’s next BIG THING in iPhone series or one of the many smartphones using Google’s Android operating system.
Android based smartphones led the business by whopping 68.1 percent of the market share while RIM and Nokia saw their share reach just 4.8 percent and 4.4 percent respectively. The smartphone market has become a “two horse race” between Android and iPhone. In the second quarter Microsoft came in strong in its effort to gain against RIM to become number three player in smartphones though it had held a small share in the market previously.
Now the question arises what should Microsoft do to be in the race? Do you have suggestions my patient readers? Well I think that most of the corporate users go for Microsoft Windows and Office suite so the next intelligent step would be to woo the corporate users with latest technologies and realize the demand for more compatible smartphones. As the corporate look to upgrading hundreds of PCs, the launch of Windows 8 has given the company the opportunity to make the corporates replace BlackBerrys with smartphones based on Windows. Android has never been corporate infrastructure friendly as Apple has been but Samsung’s Galaxy Note smartphone is changing that impression. With Microsoft too strengthening its foothold in the corporate world with the latest version of Window phone it can easily catapult RIM’s spot, which would be far easier than trying to compete with the Android or the iPhone. Don't you believe that Microsoft could benefit from continuing decline of RIM’s BlackBerry and also from the recent legal setback for Android operating system, which might cause import ban that might force handset makers to invest into making Window based phones? If the company can hit hard when the iron is still hot it can surely vroom past.
rekhamarwah has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and Microsoft. Motley Fool newsletter services recommend Google and Nokia. 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.