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Microsoft (NASDAQ:MSFT) may be a behemoth in the operating system and enterprise software space, but it is stumbling in the smartphone market, where it competes primarily with Google‘s (NASDAQ:GOOG) Android and Apple‘s (NASDAQ:AAPL) iOS. It has been more than a year since Microsoft launched the new Windows Phone 7 platform, but it is yet to gain any significant traction.

Windows Phone Lagging Behind Android, iOS, Symbian, Blackberry and even Bada.

Gartner released some sales figures for the global smartphone market in the third quarter of 2011, and Microsoft’s Windows Phone was lagging behind all the other notable players including Android, iOS, Symbian, Blackberry and even the oft-ignored Bada OS. While Android smartphone sales in Q3 2011 amounted to 52.5% of the total, Symbian and iOS accounted for 16.9% and 15.0% respectively. Of all the major platforms, Microsoft came in last with 1.5% share of the total sales. [1]

However, we expect Microsoft’s Windows Phone to gain substantial smartphone market share in the coming years. It now has the backing of all major smartphone manufacturers including Nokia (NOK), Samsung, HTC and LG. It is not only spending a lot on marketing its new devices, but also pushing its hardware partners to up their marketing spend. It is also working with component manufacturers to bring down the prices of Windows Phone devices. Microsoft is also forcing Android device manufacturers to pay it a patent licensing fee, hoping to attract them to the Windows Phone platform. We expect it to become one of the top three smartphone platforms soon, and overtake Apple’s iOS in terms of market share by 2015.

Windows Phone, along with Xbox and Zune, accounts for only about 8% of Microsoft’s $32 Trefis price estimate, while Office and Windows account for more than 50%. Even if Windows Phone takes off, we don’t expect it to impact Microsoft’s revenue in any significant manner, at least in the near future.


Notes:

  1. Gartner Says Sales of Mobile Devices Grew 5.6 Percent in Third Quarter of 2011; Smartphone Sales Increased 42 Percent, Gartner

Disclosure: No positions

Source: Microsoft's Windows Phone Fails To Gain Traction In Q3 2011