Morgan Stanley:Windows Phone 7 Is A Pivotal Release For Microsoft’s Strategic Positioning

October 9, 2010 | By Surur

Microsoft is gearing up for the official launch of Windows Phone 7 in 2 days time, and have encountered a mixture of optimism and deep pessimism.

Despite having massive revenue from other ventures, Morgan Stanley rightly notes that it is all about sentiment, with analysts and journalists increasingly noticing that they are using less and less Microsoft products and pricing the stock accordingly.

In an analyst note Morgan Stanley analysts Adam Holt, Jennifer Swanson and Melissa A. Gorham said:

Expectations for the Windows Phone 7 (WP7) could hardly be lower, with MSFT’s share eroding steadily from 10% in Q1-09 to 5% in Q2-10 at the hands of Android and the iPhone. While MSFT generates ~1% of revenue from Mobile, WP7 is still a pivotal release. A successful release could stem the tide of negative sentiment on MSFT’s positioning in Smartphones – one of the largest and fastest-growing markets in tech. With Mobile losing money and share, it is getting no or even negative equity value – but is a call option that can reverse the recent multiple compression. To be successful, MSFT will have to deliver:

1) better mobile functionality,

2) aggressive branding/ distribution,

3) the strength of the MSFT franchise, and

4) leverage with the enterprise.

The company has a 9-12 month window to show traction, and we are very cautiously optimistic.

With cautious optimism and a 12 month window for Microsoft to show that they have got what it takes, Morgan Stanley’s analyst opinion appears much more realistic that ones we saw recently saying Microsoft should split of their Xbox division, and I do not find much to disagree with it.

What is certainly true is that is seems much more than Microsoft’s involvement in smartphones appear to be at stake with Windows Phone 7, which should make the company pretty motivated to throw everything behind the division.

Via mysmarttrend.com

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http://twitter.com/sab0tage @sab0tage

At least they were stating facts rather than pulling disparaging rhetoric from some analyst's arse.

The video also reminds me why the move from "mobile" to "phone" was a good thing, hopefully I won't have to hear Americans mispronounce mobile as "mobel" as frequently.
OOOO

im bothered how analysts mention "eroding windows mobile" share as if WP7 has anything to do with windows mobile. this is a brand spanking new OS, with a brand new advertising campaign, and brand new evrything. I swear these analysts dont know anything about technology.
http://www.facebook.com/wixostrix Edwin Michael Rodriguez-Duplesis

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http://twitter.com/MistaWet @MistaWet

DRAMA!!!! It is this type of drama that adds to the hype and makes people wanna check this phone out. What MS doesn't need is for no one to be talking about WP7 or their company at all. Any press is good press at this stage of the game. People are going to wanna see what this phone is all about. Also, believe it or not, their are a ton of people that do have Androids and may want a more simpler and user friendly experience but since they know of no alternatives to what they have now, they stick it out.

There is a lot going for WP7 and I don't think the road to success is going to be that hard. They just have to continue to grow this OS into the future and stay committed to it.
gullygod

MS is fighting an up hill battle in the mobile market and I think their success will depend on the type of handsets that are available to consumers — because the OS speaks volume on its own. So far I'm VERY disappointed with the few handset I've seen today. Consumers want sexy look handsets — eye candy — to wear as accessory.

This is a Window mobile re-branding campaign that MS should have handled themselves with a flagship handset similar to the Zune HD or even the wp7 emulator form factor for at least the first six months. OEMs will be responsible for the slow growth or down fall of the Windows Phone 7.
Pedro de la Riva

I do agree that the absence of any eye-candy WP7 device at this stage is an issue.

For instance, I was ready to jump into the WP7 bandwagon ASAP as my operator contracts ends in October.
But I cannot find any WP7 device that I want to buy. None.
Most of them have horrible design (especially HTC) and they all have 8GB storage only (and I don't want the ugly LG).
What a shame.