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]

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