With the possibility there may be a smartphone war between Microsoft's Windows Phone 7 (Nasdaq:MSFT) and Google's (Nasdaq:GOOG) Andoid, the question is raised on who would survive.
From Needham & Company's point of view, it may be neither, but Apple's (NASDAQ:AAPL) iPhone may be the only one left after the smoke clears.
Here's Needham's take on the smartphone sector and question at hand:
"1) Smartphone shipments grew 92.0% in the September quarter, the fastest rate in almost five years. Smartphones captured 23.6% of the mobile phone market, up from 14.2% a year ago.
2) Android continued its winning ways, increasing its share to 24.8% in September from 15.8% in June and just 3.2% a year ago. Nokia’s share fell to 32.0% from 38.3% a year ago while BlackBerry’s (Nasdaq:RIMM) fell to 15.1% from 19.9%. The iPhone’s share was unchanged at 17.2%. All of the major platforms experienced solid double-digit growth because the market itself grew so rapidly. Android’s gain was in the quadruple digits. BlackBerry and Nokia (NYSE:NOK) shipments rose 45.8% and 60.5%, respectively, while iPhone shipments jumped 91.2%.
3) The major event in the quarter was the successful launch of Windows Phone 7, Microsoft’s new smartphone operating system. With everything at stake, we expect Microsoft (N/R) to compete aggressively with Google for the loyalty of the leading smartphone manufacturers—HTC, Samsung, Motorola (NYSE:MOT), LG and Sony Ericsson (Nasdaq:ERIC) (all N/R). A turf war between Microsoft and Google could well ensue.
4) In the short run, the turf war could put the smartphone manufacturers in the driver’s seat. Ultimately, however, commoditization, accompanied by deteriorating prices and gross margins, appears inevitable for licensees of the Android and Windows Phone 7 operating systems. With its growing brand equity, the iPhone could end up as the last man standing in this race to the bottom.
5) We do not anticipate any major changes in recent shipment trends in the December quarter. However, with the ramp of Windows Phone 7 and the anticipated launch of the iPhone on Verizon’s (NYSE:VZ) (N/R) network, things could change in March."
Microsoft closed Friday at $27.34, up $0.26, or 0.96. Google closed at $592.21, up $0.71, or 0.12 percent. Apple closed at $320.56, up $0.80, or 0.25 percent.
Monday, December 13, 2010
Windows Phone 7 (Nasdaq:MSFT), Android (Nasdaq:GOOG), Who Would Survive
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5 comments:
this easily the most outrageously flawed analysis I have ever seen. Google licenses Android under GNU; it is totally free. Google is, by definition, completely shielded from any of the negative effects of prices dropping and only stands to gain from it. In fact, as the whole industry moves to a display-advertising scheme for paying for these things, Google is lightyears ahead of the bunch, since they were there from the beginning.
Just got a new Windows Phone 7. I'm very impressed and wouldn't be surprised by it taking a lead in market share within 6mo to a year. They would need to continue marketing the developrs and keep their aggressive response to any shortcomings. I didn't expect to see such a great GUI from them. They may have something here.
Started using it WP7 last month. I had been previous customer for iPhone 3G and Android phones before. I am impressed with all the phones. But it seems WP7 will first kill iPhone and later Android. So far I dont see any compelling reason someone to go for Android or iPhone, unless they come up with something which can compete with WP7.
I agree that commoditization of the smart phone market is inevitable. However, I fail to see how that helps Apple. They are a luxury brand, so their margins should remain in tact, but their market share will probably drop and drop drastically at that.
Gaming should be a growing key point for sales to 20somethings and below.. and each co has growing vested interest. Android 2.3 improved to cater to games, iOS now houses what appears an impressive game, and WP7 made in part by an x-box team. Then there's enterprise competition as push email is available on all 3 and more desirably than RIMM. I see GOOG as pretty entrenched from a hardware perspective as they are the phones that come with the most powerful (dual core soon) chips, the OLED screens, the 4G data, and 1080p recording/playback/soon-to-be HDMI out. No iPhone or WP7 has any of that.
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