) is launching its new Windows Phone 7 operating system on nine
mobile phones. The company is partnering with AT&T (
) and T-Mobile and is banking on phones from Dell (
), HTC, LG and Samsung. Microsoft's goal is to push back on
the dominance of the smartphone market by Nokia's (
) OS, Apple's (AAPL) iOS and Google's (GOOG) Android.
We believe that the OS's compatibility with the XBox Live, tight
integration with Office 2010 and AT&T's U-verse home TV
services are some of the attractive features that could threaten
market share of competitors such as Apple and Research in Motion in
the consumer as well as the enterprise smartphone segment.
Can Windows Phone 7 threaten Apple in the consumer
According to Gartner
, Microsoft's share of the smartphone operating system market has
nearly halved, falling to 5% in the second quarter of 2010 from
9.3% a year ago. Microsoft failed to catch up with its peers,
primarily Apple's iPhone, RIM's BlackBerry and Google's
Android in terms of mobile software innovation.
In another article
, we talked about how Microsoft's Windows Phone 7 won't have any
major impact on Microsoft's stock as the segment contributes little
to the overall value of the firm. However, Windows Phone 7 has some
attractive features for consumers, which could slow down the growth
of Apple iOS, BlackBerry OS and the Android OS.
Microsoft Windows Phone 7 provides integration capabilities with
XBox Live that will potentially make smartphones using
Windows Phone 7 attractive to gamers. XBox Live is an online
gaming service that charges users a fee to play multi-player
gaming, and has nearly 10 million paying subscribers.
Another attractive feature is the integration of AT&T's
U-Verse home TV service which would allow customers to sign up for
an entertainment plan to access cable shows found on its TV
service. The mobile service will cost $9.99 a month for non
U-Verse customers, and will be free for high-end U-Verse
subscribers. We estimate that there are around 3 million U-Verse TV
We believe that the Apple iOS, used in the iPhone and iPad, will
continue to gain market share. According to our estimates, the
Apple iPhone will gain market share from around 2% in 2009 to about
11% in the global mobile phones market over our forecast
However, there could be a downside of 5% to Apple's stock if its
market share increases slowly to reach 10% by 2016, instead of the
11% that we currently forecast.
Can Windows Phone 7 threaten RIM in the enterprise
Microsoft already has a big presence in enterprises with its
dominance in the PC OS and productivity software market. It can
leverage its large enterprise customer base to grow its presence in
the enterprise mobile phone market. Windows Phone 7 offers tight
integration capabilities with Office 2010, including products such
as SharePoint, OneNote, PowerPoint and Outlook e-mail and
RIM is the market leader in the enterprise mobile phones market
with a share of around 66% as of August 2010. However, given the
threat posed by Microsoft with its new operating system, Microsoft
could take away some of RIM's share in the mobile phone's
RIM's share of the global mobile phone market should reach 3.7%
this year, up from 2.7% in 2009. We expect this growth to continue
in coming years, reaching 8% by the end of Trefis forecast
However, there could be a downside of 10% to our price estimate
for RIM if its market share only reaches 7% by 2016, instead of the
8% that we currently forecast.
You can see the complete $361 Trefis Price estimate
for Apple's stock here.
You can see the complete $72 Trefis Price
estimate for RIM's stock here