The one thing constant in the world of technology is 'change'. As technology evolves, new devices are introduced, old devices are upgraded, and most others just become obsolete. Microsoft (MSFT) has taken a major leap with the introduction of its new mobile OS, Windows Phone 8, in which it has provided various high-end features, and has taken the whole mobile OS concept to the next level via code sharing between desktop Windows OS and Windows Phone 8 OS. In fact, technology gurus are pointing out that Microsoft has announced its return to the smartphone game, and the new Windows Phone 8 is going to place Microsoft at an equal footing to Apple's (AAPL) IOS and Google's (GOOG) Android. But is Microsoft's Windows Phone 8 mobile OS going to win a major market share in an already competitive market? That is what we will try to answer.
So what makes the new Redmond Pie-based mobile OS so special? Firstly, the new OS has finally provided support to high-end performance hardware, including support for multi-core processors and high resolution displays, unlike the older Windows Phone (WP) 7, which failed to support these simple basic features in today's high-tech smartphone world. Nokia (NOK) LUMIA was a design marvel, but WP7 prevented Nokia from using any high-tech hardware in the phone; the result being that the model was overtaken by phones put out by Samsung, HTC, and Apple, in terms of performance. Now, with the introduction of these features, at least Microsoft will provide enough room for manufacturers to use high-end hardware technology in WP handsets.
Furthermore, the introduction of features like 'True Multitasking' and near-field communication will also help the new Windows Phone OS keep pace with other smartphones in the industry. One of the most striking new features is the introduction of a new high-end customizable start screen, which, technology enthusiasts see as one of the best start screens in smartphones today.
But the one new feature, which may bring Windows Phone 8 to the top, is where it allows code sharing with Windows OS desktops. By sharing kernel and coding with Windows OS, Microsoft has come up with a concept that has immense potential. This feature will enable developers to design the same apps for both desktop Windows and Windows Phone 8 OS, since the coding platform will be the same. Microsoft's upcoming new Windows OS packs a full-fledged app store and a separate screen for apps. Developers have produced many good apps for the upcoming Windows 8, currently in beta testing, which will boost new apps on a daily basis. The unification of mobile and desktop OS kernel will not only motivate developers to write the same applications for both platforms, but will provide new opportunities to integrate software and hardware advancements in graphics and processing abilities of smartphones. Developers will be able to take the benefit of existing Windows code sharing and support for high-end performance hardware to develop applications and games. Developers' existing familiarity with the Windows code will make it easier for them to start working on development of apps for the new Windows Phone 8. Window's has more than an 80% share of the PC OS, which is yet another motivating factor for developers to write applications/games for Windows 8.
The future of Windows Phone 8 surely looks bright in light of all these new features. But, there are some drawbacks, which may hurt user brand equity of the Windows Phone family in the short term. Current handsets will not be able to upgrade to the new Windows Phone 8 because of hardware support limitations. The new Windows Phone 8 hardware requirements are high and even the latest debuted Nokia LUMIA 900 is not capable of running Windows Phone 8. Therefore, WP sales are expected to plunge until the launch of Windows Phone 8 in the coming fall. Nokia is going to suffer the most from this limitation, as the company has placed big bets on the Windows Phone OS. In the short term, we expect Nokia WP handset sales to fall down, which will put pressure on its existing 10 billion euro cash reserves, in the short term. But Microsoft has announced a minor update, Windows Phone 7.8, for the legacy devices which will bring the new revamped start screen to legacy WP devices; to alleviate existing users' anger to some extent. Also, the new apps designed for Windows Phone 8 will not run on legacy devices, as the code platform has been changed.
Now the question arises, can Microsoft's new Windows Phone 8 really succeed? Can it capture market shares from the dominant Android and popular iOS? To find the answer, we have to dig deeper into the evolution of smartphones since the launch of Apple's first iPhone. Google and Apple, the most prominent smartphone OS players to date, have over the years announced many features to improve user engagement with the mobile OS platform. Google announced Google Drive, Gmail, Chrome, Google Play etc. in Androids to provide users with a seamless experience across desktops and Android handsets. Similarly, Apple's iTunes and iCloud are providing convenience to users to access personal data from any Apple device anywhere in the world. Smartphone users are becoming more and more engrossed into the whole mobile ecosystem, and it is becoming increasingly inconvenient for users to switch between platforms.
Although, it will be difficult for Microsoft to gain a material market share immediately after the launch of its new phone system, after analyzing the recent developments in Microsoft's new mobile OS, it can be safely predicted that the Redmond Pie-based company will gradually have a strong foot print in the mobile OS industry in the coming years. Nokia, the prime beneficiary of the WP's success, is thus also expected to benefit in the long term, provided it continues to produce impressively designed handsets with high performance hardware and with WP8 built into them. Read our thesis on Nokia: Buy Nokia Now: Its Patents Alone Are Worth $2.3 Per Share
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
