December US Mobile Sales: Microsoft's Foothold

Data released by comScore about mobile phone sales in December showed that trends from earlier in the year continued. Sales of Samsung handsets bested all of its rivals in the US with a market share of 24.8%, up 1.3 absolute points from September. Motorola’s hope of returning to the top tier began to vanish as its share dropped 1.7 points to 18.4%. Research In Motion (NASDAQ: RIMM) held its own with nearly 9% of the market.

The operating system statistics didn’t show much change either. Google’s (NASDAQ: GOOG) Android kept up its remarkable rise, with increased share of 7.3 points to 37.3%. Apple (NASDAQ: AAPL) has reason for concern. It operating system growth is stalled at 25%. This is hard to explain as sales of Apple iPhones surge. The only plausible explanation for this is that many companies use Android and most of them have posted increased sales. That makes a factor of many against one. Apple’s advantage for now, however, is that consumers want its phones and access to products in its App Store, which has more than 200,000 titles. The Android store is much more sparse. Android is free open source software which is popular among handset companies. Whether consumers will remain enamored of it remains to be seen.

Near the bottom of the OS list is Microsoft (NASDAQ: MSFT), which try as it might, cannot move up the chain. Its share is barely 9%, but that is unexpectedly high for software which is supposed to have almost no adopters. Windows 7 mobile and its predecessors are still in the hunt.

It is a complete coincidence that troubled handset market leader Nokia (NYSE: NOK) has about the same market share as the Microsoft software–7%. Nokia’s presence in the US market has been consistently eclipsed by Samsung, LG, and RIMM. The two weak companies, Microsoft and Nokia, which have tremendous financial and R&D resources, may still gain customers in the US. That would require Nokia to build a viable smartphone and Microsoft to marry it to Windows . Microsoft would also have to put the hundreds of millions of dollars behind product management and marketing which would be required to add substantially to Nokia’s customer base.

Nokia and Microsoft have been accused of having no imagination.  Analysts claim that their products are not “consumer friendly.” But  desperation and money may go a long way to reverse that. Access to huge pools of capital is still important in the smartphone business and that is one thing which Microsoft and Nokia have in their arsenals.

Douglas A. McIntyre