Why Microsoft Cannot Win the Smartphone OS Race

Includes: AAPL, BB, GOOG, MSFT
by: Top Economic Articles

Almost every major software company these days is trying to get in on the smartphone operating system (OS) market and Microsoft (MSFT) is no exception. With the fall of Research In Motion (RIMM) looming, Microsoft’s move to jump back into the fray may be a risky strategy. Microsoft recently released a prototype of its latest phone operating system, Windows Phone 7.5 codename “Mango” as its flagship phone operating system to compete with the like of Apple’s (AAPL) iOS and Google’s (GOOG) Android. The final version of this updated operating system is scheduled to be released by Q4 of this year.

Microsoft has been enjoying a first mover advantage in computer operating systems for many years, but is a latecomer to smartphone operating systems. As such, Windows Phone OS has been drowned out by the names Apple and Google. And the people up at Redmond are definitely not happy about that. Microsoft has pulled out all the stops on this recent “Mango” update to make sure people take notice. The new update to the Windows Phone OS comes packed with new features, approximately 500 in all, most important of which are:

  • Facebook and Twitter integration
  • Multitasking
  • Multiple email account integration
  • Microsoft Office integration
  • Internet Explorer 9 integration
  • Marketplace app store

The new features of Windows Phone 7 will definitely push Microsoft back into the smartphone OS fighting ring, but they are chasing a moving target — as Microsoft tries to catch up, Apple and Google are also improving and moving into new orbits. The odds are that Microsoft is chasing a perpetually moving finish line. At this time, I'd rather place my bets on Apple or Google, as history has been on the side of the early movers.

Bottom Line

Windows Phone 7.5 (Mango) is not a knockout punch to either Apple’s iOS or Google’s Android. But, it is a “significant jump forward in the mobile arena” for Microsoft. As Molen of Engadget writes, “by adding in crucial elements like multitasking, groups, social network integration and more, it's starting to play catch-up to the other big names in mobile. Not overcome — catch-up.” But, this move by Microsoft may never pay off. Playing catch-up is not a very lucrative game. I'd rather put my money on Apple or Google.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.