It's painfully obvious that Microsoft (NASDAQ:MSFT) has fallen far behind in smartphones. Its clunky Windows Mobile platform is losing market share at an alarming rate to the Apple (NASDAQ:AAPL) iPhone and the never-ending stream of quality Google (NASDAQ:GOOG) Android-powered smartphones.
Microsoft hopes to get back in the game with Windows Phone 7 this holiday season, but look at what's happened in the past two weeks:
1) AT&T (NYSE:T) announced in late May that 40% of iPhones are sold to business users.
That means true acceptance by IT departments, meaning that Microsoft won't just have to deal with Research In Motion (RIMM). The iPhone is in the mix too.
2) Demand for Android-powered phones Just Kicked into High Gear.
The HTC EVO 4G is completely sold out at Sprint (NYSE:S), and the HTC Droid Incredible is now back-ordered at Verizon (NYSE:VZ) is back-ordered with an estimated three-week wait time. And there are more Android phones on the way - like the Motorola (MOT) A995 Droid 2 - that should generate similar excitement.
3) iPhone 4 is Awesome
Ignore the feature-mongering blogosphere. Apple has once again delivered a stunning design in iPhone 4, and the iPhone OS is still top-of-the-food chain when it comes to ease of use. In other words, Apple nailed the stuff that actually moves product.
The odds are that WP7 will rock. Microsoft has taken a big leap forward in quality control with Windows 7, and that new focus should feed through to WP7. However, it's still months away, and in the meantime, Apple and Google are busy dividing the world between them.
Microsoft needs a catalyst, and WP7 is stepping into a snake pit years too late...
Disclosure: Long AAPL