Microsoft is investing heavily in its upcoming Windows Phone 7 launch. The software giant is reportedly dumping $500M into marketing and another $500M into OEMs and third-party software developers to give its mobile OS a much needed jump-start. With so much cash flowing into this attempt at mobile greatness, analysts are responding en masse to assess the financial value of this somewhat risky investment.
The latest analyst to join this parade is Eric Bleeker of the Motley Fool, a well-known financial advisory company. Bleeker offered his perspective on Windows Phone 7 and the volatile mobile phone market into which Microsoft is entering. According to Bleeker, the outlook for Windows Phone 7 is grim. He concludes his analysis with the sobering thought:
I hate to sound dismissive of Windows Phone 7 before it even hits stores, but the deck is stacked against it. Regardless of Windows Phone 7′s features, it’s just too late in the game.
In his analysis, Bleeker makes several valid points about Microsoft’s failed mobile strategy. Bleeker reminds us that smartphones have 30% market share and notes that Microsoft is looking at this remaining 70% as a gold mine of customers ready for the plundering. This assumption that all 70% are ripe for the picking is incorrect.
Many people have not adopted a smartphone for a reason – they are not interested in the higher cost and complexity associated with these devices. Bleeker asserts that there is a large core set of users who will not buy a smartphone, regardless of how much money and effort Microsoft throws at Windows Phone 7. Microsoft missed out on grabbing a piece of the current 30% smartphone market and they can not make it up with this remaining 70%.
Bleeker also points out that Microsoft intends to snag customers from the pool of current iPhone and Android users. This too is a difficult feat as most iPhone (89%) and Android (71%) owners plan to stay with their current platform when they upgrade. Lest we forget, people spend a good amount on time and money on the apps for their selected platform. Most people are reticent to give up that investment and enticing them to start over from scratch with Windows Phone 7 will be difficult, if not impossible.
I could continue but these are the two main arguments Bleeker presents in his grim assessment of Windows Phone 7. If you want to read the full essay, you can find it here. When you have finished reading, come back and let us know your opinions on this analysis. Will Microsoft’s Windows Phone 7 falter as predicted or will it achieve success beyond the analysts’ wildest dreams?