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Monday, October 08, 2007

Through The Fly's Eyes: Google, Microsoft, and Apple

from Larry Ramer of Theflyonthewall.com

The gPhone May Sting Microsoft and Apple

In the long run, Google’s (GOOG) rumored gPhone may hurt Microsoft (MSFT) almost as much as it hurts Apple (AAPL). According to an article in today’s International Herald Tribune, Google’s motive in developing the gPhone is to create software for cellular phones that will be an alternative to current cellular operating systems.

Google’s entrance into the cellular phone operating system market could potentially reduce Microsoft’s revenue. While only 12 million phones with the company’s Windows Mobile operating system were sold last year, that number has been growing rapidly each year. The number of phones running Windows Mobile doubled from the end of 2005 to the end of last year. With only 10% of a rapidly growing market, Windows Mobile had a chance to become a really significant growth engine for Microsoft (one of the company’s few), but Google’s operating system may eliminate that possibility.

Unlike Microsoft, Google is not expected to charge cellular carriers a licensing fee to run its mobile software. Instead, Google plans to rely on advertising that appears on the phones’ screens to profit from the project. And if Google can enhance the mobile Internet experience, cell phone companies will have another reason to use Google’s operating system instead of Windows Mobile.

Indeed, 45% of people polled by The Kelsey Group indicated that they would look for better mobile Internet capabilities on their next cell phone. So, even though Google is not directly targeting iPhone users, the gPhone may wind up pulling some of them away, if it can offer better Internet capabilities. On the other hand, many iPhone users could be turned off by the advertising on the gPhone, and its look, which is reportedly less snazzy than the iPhone.

But, in any case, Microsoft's Windows Mobile looks like it may be somewhat endangered by Google’s impending move into the mobile Internet.

2 Comments:

  • You said the gPhone might hurt Microsoft "almost as much as it hurts Apple". I hope this is just poor writing, because the gPhone certainly will be a threat to Windows mobile more than it is to the iPhone. If you agree, you might consider editing your piece. If you really truly do believe that the iPhone is more threatened by the gPhone than Windows Mobile devices will be, then well... ummm... you probably don't want to admit that here unless you simply don't care about keeping any sort of credibility with your readership.

    Congrats on another horrible post -- this blog is a riot.

    By Blogger lumi, at 3:37 PM  

  • I would like to rebut lumi's comments.

    Windows has a revenue stream at risk that is a minute component of the picture at MSFT. At Apple, on the other hand, thier phone has added an additional 60 bil in mkt. cap., so clearly, it is a big deal expectation-wise over there.

    So not factoring in margins, growth, # of users, and basically a bunch of other estimates, you can follow the author's logic that in a market value sense, the iphone is more threatened by the gphone than MSFT. If you intended that windows mobile is on more units, or has more market penetration, I think you missed the author's point.

    I find your comment annoying for the following 3 reasons:

    1.) Suggesting to someone "I hope this is just poor writing, because XYZ" is insulting and akin to saying "I hope it's just be your misshapen face and bulbous features, because honestly, that shirt looked great on the rack at the store, when I bought for you." Obviously, no one would purposefully write poorly then publish it.

    2.) Free blog. Free. I find the news services offered by flyonthewall indispensable in my daily rummagings as a trader, let alone these write-ups. So, for them to offer a blog as well, with succinct articles, for FREE, is all the more better.

    3.) The vitriol seems unnecessary. You have a different view, but don't even take the time to remotely back up your assertion, even in a careless way. WHY is it a bigger deal for windows?

    Why are you bitter about this place?

    By Blogger Danny, at 5:21 PM  

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