Will Windows Phone Upend Conventional Wisdom?
(November 23, 2012) Last night’s Patriot rout of the sad-sack New York Jets had all the hallmarks of a turkey. As someone who shelled out green to see some green action I had seen enough red on the field for one night so I strolled on over to the Verizon Studio to check out the latest handsets on display. As expected, people were milling about playing with the dozens of new phones and tables on display, preferring the indoor digital toys to the schoolyard romp taking place outside.
I didn’t notice any Windows Phones being displayed so I asked one of the Verizon reps where they were. The nice young Verizon lady sheepishly explained to me that there were none on display, but expected the corporate marketing team to bring them in shortly. It appeared my question was the number one request people were making of her that night, and she looked embarrassed to admit no one in corporate had thought to display these new shiny Microsoft gadgets so soon after the launch last week.
My experience last night was no outlier. I had a chance to speak for 30 minutes with a good friend of mine in the legal profession. With Verizon carrying the HTC 8X, the low-cost Nokia Lumia 822 and the soon-to-be-released Samsung Odyssey, you now have three solid Windows Phone choices to choose from. In his expert opinion people who are heavy users of Word and Excel files will, over time, gravitate towards the Windows platform as the phone of choice. You can’t compare the experience of flipping through a spreadsheet on, say the HTC 8X, with using one of the downloadable iPhone apps such as Documents to Go.
Consensus has traditionally been that Microsoft is a lumbering, clumsy giant when it comes to barging its’ way into new markets. The original Windows Phone 7.0 platform for smartphones, launched November 2010, was an utter flop, perhaps even worse that the ancient CE platform rollout. After cutting a deal with Nokia in February 2011 to bring some much needed handheld experience and going back to drawing board – along with some highly publicized apologies from top Microsoft brass – the conventional wisdom was that Windows Phone 8 was going to be yet another flop.
Boy does it look like Steve Ballmer is going to prove the skeptics wrong.
I’m hearing anecdotals from contacts of mine of people who are considering returning newly-bought iPhone 5s in order to switch into the Odyssey and HTC Windows phones. I’m seeing people at the few Verizon stores that carry the phone get bombarded with additional questions from interested customers wanting to know when the Windows App store might start to look more like Apple and Google’s. And I’m seeing a fair number of corporations with large Word & Excel deployments seriously consider the Windows Phone architecture as something to rollout in the coming quarters.
In short, while Apple’s market position isn’t at risk, I don’t see the landscape getting worse for Microsoft anymore. I think this time next year we’ll be talking about the Windows Phone platform garnering 5-10%+ US N.A. market share. Currently Microsoft’s mobile market share is hovering above the 1% mark.
At $27 and change Microsoft’s valuation is almost entirely derived from its desktop operating system and Word cash cows. There is little to no value being placed on the company’s future in mobile. My guess is, that’s about to change, and in a big way.
Headlines that are reporting the death of Microsoft in a wireless world are, in the words of Mark Twain, greatly exaggerated. Be prepared, as I like to say, to be surprised to the upside.
At the time of publication of this report, I am long Microsoft
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