Analysts who watch the smartphone market will not have to wait for the legal battle between Apple Inc. (NASDAQ: AAPL) and Samsung to advance any further before judging the future of the Microsoft Corp. (NASDAQ: MSFT) Windows Mobile OS. Samsung will launch a smartphone based on the system. If it does not sell well, the potential benefit Microsoft might get from the Apple court victory will quickly dissipate. If anything is true about the smartphone market, it is that handsets that do well have robust sales right out of the gate.
The Samsung ATIV family of products, which has just been introduced, includes a 10.1-inch tablet that operates on Windows RT. The new Samsung 4.8-inch phone runs Windows Mobile 8. Samsung has not set a price for the products, but since all smartphone companies peg retail prices to Apple’s iPhones, it is likely the Samsung offerings will have prices set lower than the new iPhone 5 and the new iPad.
The media already has been flooded by comments that the Samsung phones powered by Microsoft may allow the South Korean company to take some of the sting out of Apple’s legal victory. It has been pointed out also that Microsoft’s main smartphone partner, Nokia Corp. (NYSE: NOK), will not release most of its Windows-based products until after the Samsung products are in the market. Nokia’s worldwide push for its Windows phones is months away. Those things will not matter if consumers do not take to the new Samsung products immediately.
Samsung is the world’s largest handset company, which gives it a great deal of marketing leverage with carriers. It should be able to get the Windows-based products to be among the smartphones with substantial carrier backing as they sell new subscriptions. But no amount of market leverage will work if people do not warm to an OS that is not Google Inc.’s (NASDAQ: GOOG) Android, which is wildly successful, or to the Apple iOS.
Microsoft faces a barrier that is beyond adoption of its OS. Apple’s iPhone 5 will have sales well into the tens of millions worldwide. That will make it difficult for any challenger to gain market share for a while.
Early sales of new smartphones are among the best barometers of later success. For Microsoft’s sake, the new Samsung products will have to fly off the shelves.
Douglas A. McIntyre
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