Microsoft Windows Phone Sales Dismal in the First Year; Stock Awaits Earnings

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It has been more than a year since Microsoft (NASDAQ:MSFT) launched its new smartphone OS – Windows Phone 7. Sales of Windows Phone devices have been below expectations according to Steve Ballmer, but we didn’t have any concrete numbers until analysts recently revealed that Microsoft’s Windows Phone unit sales were around 1.4 million – much lower than competing platforms like Google‘s (NASDAQ:GOOG) Android and Apple‘s (NASDAQ:AAPL) iOS. In comparison, Google is seeing nearly 550 device activations worldwide per day while Apple saw more than a million iPhone 4S pre-orders on the very first day. Microsoft had around 1.3% share of the total units sold in the past year. [1]

We don’t expect Windows Phone to become a major revenue driver for Microsoft anytime soon. It accounts for only a fraction of the $28 Trefis price estimate for Microsoft, which is driven largely by Windows and Office.

Microsoft announces earnings on Thursday, and we look for more information in this release. See our preview note: Microsoft Earnings Preview: What We’re Watching Thursday.

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Check out our complete analysis for Microsoft.

Microsoft Continues to Push Forward Windows Phone

Microsoft has stepped up its efforts in Windows Phone significantly in the past year. It now has partnerships with Nokia, Samsung, HTC and most other major smartphone manufacturers. It recently launched an upgrade – Windows Phone 7.5 Mango – for all Windows Phone devices which brings over 500 new features to the platform. It will also be launching new dual core, LTE enabled devices soon, which will bring it neck to neck with new Android device and the new Apple iPhone 4S. It is also pushing its partners to up their marketing and ad spend to boost Windows Phone sales numbers. We expect it to become one of the top 3 smartphone platforms soon, and overtake Apple’s iOS by 2015 in terms of worldwide marketshare.

Growth in Windows Phone sales may not change the stock price much, which is still driven mainly by Windows and Office sales. However, with Windows Phone and Windows 8, Microsoft will have a tightly integrated software ecosystem which will be aimed at both consumers and enterprises.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. Windows Phone, a year on, Asymco []