Morgan Stanley: Microsoft to buy its way to the top with Windows Phone 7

Microsoft is launching Windows Phone 7 with much fanfare and even more cash. So much cash that Morgan Stanley analyst Ehud Gelblum predicts the Redmond Company could buy its way into this mobile OS war, using its cash to propel itself into third place behind Android and iOS. According to Gelblum, Microsoft has a war chest of $36.8 billion and is not afraid to use it to compete in this mobile marketplace.

Currently, Nokia leads the pack with a 41% market share and right behind the Finnish company is RIM (18%), Android (17%), and Apple (14%). By 2012, this market distribution will be turned upside down and inside out. Gelblum predicts that Android will take the top spot with 30% of the market, Apple will follow with 25% and the remaining competitors, RIM, Nokia, and Microsoft, will grab 15% each.

Microsoft can grab this market share within two years by pumping cash into slick advertising for Windows Phone 7. The Redmond company has already dumped $500 million into advertising for the nascent platform and the first fruits of this endeavor debuted earlier this month. Microsoft can also heavily subsidize its Windows Phone 7 handsets, coughing up its own cash to lower the end cost for consumers and up the profits for the carriers.

Cash isn’t everything, though, and Gelblum points out that Windows Phone 7 is a decent operating system that builds upon two strong points for Microsoft, its Xbox gaming system and its Zune media services. Gelblum asserts that cash and a competent OS will combine to create an overnight success for Microsoft.

While Gelblum brings out some valid points, the analyst assumes carriers will play nice with Windows Phone 7 and will work hard to promote the platform to its customers. As we saw with the ill-fated Kin, carrier deals can turn sour and a handset can go from praise to the dumpster in an amazingly short amount of time. Nonetheless, I am rooting for Windows Phone 7 and I hope it will succeed based upon its merits and not the size of Microsoft’s pockets. Anyone share a similar outlook for upcoming mobile OS?

[Via The Street]

  • Sanna

    No Flash. Windows Phone Kin 2. Fail…

    No Tethering
    No Copy & Paster
    No Unified Inbox
    No Third Party Multitasking
    No Fast app switching
    No HTML5 or Flash
    No CDMA phones till 2011
    No 16GB phones announced

    This is just getting rediculous!!!

    • sigo

      But you can make phone call without holding it towards the planet mercury !

  • sinbad

    I had personally seen a demo unit of WP7 , its the nice phone I had seen after the first iphone release. All the above “No”s you can find in other platforms also. Thats the problem with perception for me XBox+Zune+Office itself is a reason for buying the phone.

  • greg newman

    Microsoft is doing the same thing Apple did with the Iphone and now the Ipad was bring out a product that has strong points and weak points and improve Iphone and Ipad over time. Microsoft has said they donot intend to
    make another smart phone at this time and will improve the Windows phone 7 over time with additional
    features. Now Microsoft must now heavilly advertise this phone to let People know it exists so that when People go into a cellular phone store and see Windows Phones 7 models the People will remember the commercials and consider buying a windows phone 7. Microsoft must do this right because they have stiff competition and when a person goes into a cell phone store there are so many makes and models and Carriers with all theses
    different plans that it can confuse a person. microsoft must get people’s mind to think about their phone.

  • Mike

    Looking forward to the WinPhone. I’m sticking with iPhone though until WinPhone has cut/paste, multitasking, and at least 32gigs of storage (a nice app store wouldn’t hurt either). Of course, by the time all this happens, the iPhone will probably have 64 or 128 gigs storage, and probably the ability to read my mind. I think it’s an up-hill climb for Microsoft.

    Completely off topic: after decades of arrogance, it’s nice watching Microsoft squirm.

  • Pete

    Let’s see which companies would be using W7:
    Apple -> No way
    RIM -> No way
    Nokia -> No way
    Samsung -> Using Android and Bada in smartphones, doesn’t need third OS
    HTC -> Strong in Android, why whould use W7?
    Motorola -> Android + W7
    SonyE -> Android + W7
    So, it’s quite clear W7 will be directly competing with Android.. And if there aren’t any unique selling points (and draw from consumers), there’s no reason why any company would be using W7 (with license fees!) instead of Android with established app store and good reputation.

    RIM can switch the OS, and there’s instantly >10% market share. Nokia can start using Meego, and there’s no doubt they wouldn’t sell decent number of phones to get things going.. But for W7.. ..Microsoft can’t get the phones out itself.. and if potential manufacturers stick to Android, there’s no way W7 would survive.

    All in all, I dont’t see any chance for W7 to make it big.

  • Mista Wet

    You wanna see MS get these updates out?

    New Apple commercial

    Apple – Hello. I’m an i-phone
    MS – and I’m a Windows Phone 7
    Apple – I hear your initial release isn’t going so well.
    MS – My release went fine. Some people are panicking because I don’t have

    No Tethering
    No Copy & Paste
    No Unified Inbox
    No Third Party Multitasking
    No Fast app switching
    No HTML5 or Flash
    No CDMA phones till 2011
    No 16GB phones

    Apple – Walks away shaking his head while Windows guy continues stating what features WP7 doesn’t have.

  • mirmit

    How can someone sith a minimun sense of reality can imagine that 25% of the worldwide population able to by a smartphone will be able to spend $600+ in an apple terminal?

    Everybody doesn’t have US income.

    Android makers are starting to push sub $100 devices. those can have significant impact in emerging countries. Same goes with Symbian based devices much reasonable pricing for the emerging countries when 10’s more people are expected to get there sole access to internet thru mobile device.

    Either the market share we are talking here ar US centric and whaouu.. what a push Nokia will get, or it Wordwide based and then it’s totaly absurd (to not use other words).

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