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Morgan Stanley analyst predicts Microsoft will buy its way to triple smartphone market share in 2 years

“You could buy your way in, if you are Microsoft,” he said. “This is a market where a deep balance sheet will help Microsoft determine where they want to go.”

He notes a good marketing campaign can do wonders for adoption, with Ehud predicting Microsoft will hit 15% market share in 2012 (about the same as the iPhone’s share now)

“With [Microsoft’s] resources, I think they can sustain double-digit market share,” he said.

He notes Microsoft, with $36.8 billion in the bank, could win market share in multiple other ways, including subsidizing phone costs.

He still however predicts Android will lead the pack with 30%, Apple next with 25%, and RIM, Nokia and Microsoft all having 15% of the market.

via Morgan Stanley analyst predicts Microsoft will triple smartphone market share in 2 years.

There you have it: users are so easily persuaded that a platform purchasing decision can be acquired via small outlays of cash for ads and subsidies for vendors and operators.

  • http://www.opineapple.com Mark Newton

    Yep. It's worked for them with Zune, XBox and Bing. Why wouldn't it work for Windows Mobile?

  • Jeremy Whitt

    Horace,
    Thank you for so clearly making the ridiculous sound ridiculous. I want to forward your posts to my friends, but none of them would "get it"…..Good point Mark!

  • joe c

    Horace:

    Hey, that strategy often works in elections. ;)

  • Gandhi

    "He notes Microsoft, with $36.8 billion in the bank, could win market share in multiple other ways, "

    Except for the one way that is virtually guaranteed to win you sales – make a compelling product

  • Jason

    Apparently it doesn't take much to qualify as a Morgan Stanley analyst.

    • Winston

      Just takes
      a good lacrosse game &
      daddy speaking to the right golf buddies.

  • yet another steve

    I read a (probably old and wise and only new to me) saying not long ago:

    Nothing can kill a mediocre product like a great marketing campaign.

    MS is years behind technologically.

    Yes, they can throw virtually unlimited resources at it. But so can Apple and Google if they wish. They ALL have more dollar resources than can possibly be deployed effectively. Now to its credit, MS is quite good at engineering. But their design and management processes are deeply flawed. Otherwise MS would have more share than this already.

    MS didn't ignore this market. MS failed. Spectacularly.

  • Steven Noyes

    OK. I think this is more plausible than many of the others here. Given what I have seen of WP7, they have a decent product and the question is marketing. Phones have little to do with being a direct to consumer item. Fromt he US market standpoint, only one phone is really a direct to consumer device. It is the iPhone. Other phones are sold through carriers and this represents MS's entry point and Android's weakness.

    The carriers will promote the flavor of the day. If Android is not doing what they want (too much market share), the carriers will start to support the next flavor. There will be 2 for 1 specials and the like.

    But these specials will be offered by the CARRIERS to consumers. Just like you can't buy a Google phone (that did not work out well for Google), you by a phone from a carrier. Heck, even the new Samsung phones on Verizon are Verizon phones. No Google. No Android. The advertisements are simply "Verizon". Google does not offer special deals to the consumer. MS will not offer special deals to the consumer. The carriers, however, will with MS's money.

    Now. MS is not selling to consumers. They are selling to handset makers. Handset makers are not selling to consumers (except for Apple). They are selling to carriers. Offer a good deal to the handset makers and the carriers, and they don't care what phone they sell. They will push whatever the flavor of the day is.

  • RattyUK

    This will be interesting. Microsoft grabbed the games market by throwing money at it. They threw an awesome amount of money to gain market share. They were up against two reasonably well placed incumbents but for a few years could not actually win against the company that were selling old technology (Nintendo) and scored a pyrrhic victory against Sony who had arguably the better machine.

    In this battle however they are going up against Apple so it should be very interesting to see how this plays out. They also have to beat Google as well, in fact going up against Google is harder because it is the manufacturers that make Microsoft phones that are actually shipping Google phones now. So that is going to make things very interesting.

    • Charlie

      Don't forget that Sony fumbled by launching the PS3 much later than the 360, and at much higher cost – this gave Microsoft the opportunity they needed to gain market share with the 360 as there wasn't any real competition, and yet it still cost them a small financial fortune (and that's not including all the defective hardware).

      MS will have an uphill struggle with WM7, but it's true that the carriers will decide how successful it is and apparently many of the carriers detest Android and iPhone.

      If MS cosy up with the carriers they may stand a chance, unfortunately this will most likely mean loading the device with a ton of cr@pware and disabling useful features such as tethering etc., and putting in jeopardy what would otherwise have been a nice UX.

  • iOSWeekly

    It's not that unlikely an event for ms to get 15% of the smartphone market. Theres plenty of marketshare to be gained from rim.

    Someone sarcastically referred to zune, xbox & bing, but the fact is that ms infact DID Gain marketshare for bing and xbox by throwing lots of money behind them (xbox spectacually so, they have lost hundreds of millions to gain the number 2 spot – ironically in what could soon be a declining market thanks to apple).

    The big question is will microsoft shareholders put up with it??? Microsoft isn't the growth company it once was, and if I was a shareholder then I would be voting balmer out if he spent hundreds of millions of dollars on gaining a small mobile OS market share with questionable value, especially after the hundreds of millions of dollars wasted on the Kin/danger debacle.

    MS should really be at least considering releasing its own hardware if it wants to make any sort of profits In the mobile field. Plus if it offered ms office suite with a usable touch interface for all other platforms including ipad it would probably make a killing. But it won't.

    • http://www.asymco.com Horace Dediu

      A billion here, a billion there and pretty soon you're talking about real money. It all shows up in the stock price. Microsoft governance being what it is, don't expect any shareholder rebellion.

  • John

    Depending on how MS views the endgame buying in may make sense. If five years from now smartphones evolve into indispensable tools for modern living then maybe it makes sense for MS to pay this ante so they can be a part of that game. Maybe they have ideas about monetizing this down the line through some sort of on line commerce. If the smartphone evolves into a kind of electronic credit card which captures 1% or so of all transactions then maybe it makes sense to buy your way in now. Five years from now will be too late.

    What if you could shop and buy things and skip the trip to the cash register. You just somehow bump your phone against a price tag, the tag and the phone negotiate the purchase, they both go online and confirm the transfer of funds, then the price tag registers itself as sold and you walk out through the detectors by the door. At this point why do you need Visa or MC? Apple or MS or Google could be their own bank of sorts.

    I don't know that anything like this will happen, but the potential is there. We see something like this already in Japan. Retail sales are something like three or four trillion dollars in the US alone. If you can keep a couple percent of that every year because you make the phone that negotiates the deal that is certainly a worthwhile target.

    This is a simple scenario. If anything like this does happen and if MS gets 10% or 20% of that because they invested a billion or three now that would seem like smart business.

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