Microsoft Hungry for Smartphone Market Share, Rolls Out Mango Update

Microsoft (NASDAQ:MSFT) is one of the major players in the smartphone industry. It launched Windows Phone 7 last year, which competes with Android from Google (NASDAQ:GOOG) and iOS from Apple. It is widely expected to become the third major smartphone platform in the coming years after Android and iOS with some leading research firms like Gartner and IDC calling for it to take up to 20% of the market by 2015. Earlier this week, Microsoft started rolling out the Windows Phone 7.5 “Mango” update to all existing Windows Phone devices. ^[1]

We don’t expect Windows Phone to become one of Microsoft’s top revenue generators anytime soon, but it could easily become one of Microsoft’s many billion dollar businesses. Xbox, Zune and Windows Phone together account for almost 10% of the $28 Trefis price estimate for Microsoft, which is about 10% above the current market price.

Windows Phone 7.5 Mango to Drive Device Sales

Since Microsoft released a beta version of Windows Phone 7.5, and the reviews have been overwhelmingly positive. One of advantages is that it works great even on the first generation of Windows Phone smartphones. The latest versions of Android, on the other hand, often don’t work on older devices or on devices.

With webOS and Symbian out of the game, Windows Phone is now the only alternative to Android for device manufacturers. Google’s Motorola acquisition hasn’t helped much for Google so far as manufacturers like Samsung are looking to hedge their Android bets with investments in other platforms. We believe these factors will help Windows Phone gain a significant amount of market share in the near future. Research firms Gartner and IDC estimate that Windows Phone will lead iOS by 2015 with about 20% of the global market share though this is admittedly well off in the future for a rapidly changing industry. ^[2]

With the upcoming Windows 8 launch next year, Microsoft will offer a tightly integrated ecosystem that will work on all devices – computers, tablets and smartphones (Windows Phone). Windows Phone already has more than 30,000 apps, which is much lower than iOS and Android but surely will grow significantly in the coming years.

We currently expect the revenues from Xbox and Windows Phone to reach almost $4 billion by the end of the forecast period. This could prove conservative if Windows Phone takes off like many expect.

Check out our complete price analysis for Microsoft.

1. Windows Phone 7.5 “Mango” update begins, Windows Phone Blog [↩]
2. Windows Phone To Steal Second Place From iOS By 2015, Techcrunch [↩]