| Report examines Microsoft's Smartphone OS market position |
May 11, 2004
Market analyst firm Research and Markets Ltd. released a report today which suggests that while Microsoft's Smartphone software platform is having some difficulty gaining traction in the mobile phone market, Microsoft should not be counted out just yet. The report, titled Microsoft Smartphone: the entry strategy, chances of success, and the impact Smartphone will have on the handset industry and Microsoft's balance sheet, estimates that while only 1.6 million Smartphone-based handsets will be sold in 2003, representing just 0.4 percent of the total handset market, this figure will rise to 28 million units in 2005, or 5.8 percent of the total handset market.
Compiled through discussions with Microsoft, operators, and developers, the report models the impact of Smartphone operating system licensee fees on Microsoft's bottom line and reportedly demonstrates that the software giant is fundamentally not in this game for the license fee alone.
Instead, the report suggests, Smartphone OS is a key component of a broader Microsoft strategy to propagate devices that can "consume" .NET applications and services. The report then examines the .NET strategy, identifies where Smartphone fits in, and projects how it will act as a multiplier for revenues from other Microsoft divisions. While the handset vendors focus on stagnating annual shipments figures, the report says, Microsoft will be watching the growth of an accumulated installed user-base.
Large, high-quality color screens, PDA-level processing capacity, and application and hardware extensibility distinguish generic smartphone devices from traditional "dumb" mobile handsets, according to the report: users obtain greater utility, while application developers acquire a new addressable market and network operators get devices that offer a very real chance of driving data revenues.
The report provides a detailed overview of the component aspects of Microsoft's Smartphone software and the associated hardware device specifications. Additionally, the user experience of typical smartphones is analyzed, and the strengths and weaknesses of Microsoft's Smartphone implementation are highlighted from three perspectives: the end-user, the application developer, and the network operator.
The report suggests that traditional handset vendors are smart to oppose Microsoft's entry into their market. The report analyzes the impact the software giant's entry will have on the handset industry -- from shifting consumer utility away from handset hardware toward software and applications, to lowering the barriers for new market entrants.
The report further suggests that Microsoft anticipated a hostile reception to Smartphone and identifies five fronts on which the company has launched attacks in order to secure a presence in the handset OS market -- and assesses Microsoft's performance in each area.
Contrary to much industry sentiment, the report says, Microsoft's position is not impossible. The report identifies factors driving and retarding the roll-out of Smartphone, and highlights the issues Microsoft must address now if it is to see success in the handset arena.
The report is available from Research and Markets Ltd..
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