“In the last quarter, the iPhone and Research in Motion (maker of the Blackberry) overtook Windows Mobile, while Nokia remains comfortably in first place in smartphones. At the end of the June quarter, Microsoft had to admit that Windows Mobile missed it self-set target of 20 million by 2 million,” Tim Nash writes for Low End Mac.
“In today’s mobile market, Microsoft is already outpowered by Apple’s financial returns,” Nash writes. “Last quarter Apple sold 6.9 million iPhones at an average price of over $650. With a margin of over 50% (analyst Charles Wolf of Needham & Co), this generates gross profit of over $2.2 billion. In the year up to June 30, Microsoft sold 18 million Windows Mobile licenses for $8-15 per license (Strategy Analytics) for a maximum of $270 million. With RIM reporting gross profit of $1.3 billion and Nokia selling 15.5 million units (mainly N series and E series) in their respective last quarters, Microsoft is falling more and more behind just as the market is expanding.”
Nash writes, “Windows Mobile 7 has been delayed. HTC, the Android G1 manufacturer, expected to release a WM7 handset in Q1 2008. Now the next release will, in the words of longtime Microsoft follower Paul Thurrott, “allow smart phones to render Web pages like they did almost a decade ago on traditional PCs”. The interim version after that looks as though it will ship in late 2009 (ZDNet’s Mary Jo Foley). It looks like too little too late. The iPhone will be through the annual update by then, and the App Store will be closing in on or already past 1 billion downloads.”
Full article here.
One more to add to Surur’s list:
real-time video streaming
@Surur
Question: If Apple keeps 30% of the market, what percentage does Windows Mobile have to grab in order to generate the same amount of money?
The answer is, they can’t.
According to these numbers (and my back-of-the-envelope calculations) in order for Microsoft to generate as much revenue as Apple makes in profit, they have to sell more than 20 times as many phones. Doing the math, that can only happen if Apple drops to about 5% of the market, and no other competitors (RIM, Nokia, Android) have any market share at all.
It’s already over.
I guess another way of putting it is, Microsoft’s margin on their software is irrelevant to their winning in this market even it it is 80%.
If their Windows Mobile had 100% margin (assuming they had no costs and keeping every penny of revenue as profit) they can still only make 1/20th what Apple is clearing. That’s assuming the numbers are right. That Apple is making about 50% on iPhones selling for about $650 including telco subsidies, and Microsoft is getting $8 – $15 per phone for licensing Windows Mobile.
@disposableidentity
I struggle to see the relevance. Just because MS makes less revenue from Windows Mobile does not suddenly mean “its over”. I am sure Apple makes more revenue from selling Macbook Air than MS from selling Vista also. It seems you (and the author of the article) seems obsessed with the money Apple makes, as if is the only way to keep score.
As a user, I do not care how much money Apple or Microsoft make, as long as they produce products that keep me productive. Microsoft, despite probably only turning a profit from the Windows Mobile devision in the last 2 years, has produced a product that has great features, and which many OEM’s like Samsung and Sony Ericsson find attractive, and produce products which I find useful and buy.
Despite earning less than Apple in the Windows Mobile devision they seem to have done a lot more coding, for example giving me a full bluetooth stack with A2DP and bluetooth FTP.
Therefore your premise that more revenue means more resources will be spent on improving the code appears to be flawed, as MS has had much less revenue, and appears to have done a lot more with it.
You may argue that instead of adding features, Apple spent their money deciding which features to leave out, to make an easy to use device, but I dont need handholding and in fact would be frustrated by the Apple’s prison.
It astounds me that so many people find it comfortable. Do you really want to be treated like a novice for the duration of your iPhone ownership?
The relevance is that Microsoft has historically used a large well-funded effort to enter a market in order to dominate it. Once a monopoly position has been established they let their development efforts wane while collecting an unending stream of revenue.
If they can’t establish a monopoly position in a market (or at the least a dominant position), their business model doesn’t work. History seems to show that they can’t compete on the merits of their products alone.
“The relevance is that Microsoft has historically used a large well-funded effort to enter a market in order to dominate it.”
Since that hasn’t happened in the Mobile world yet (Windows Mobile being their smallest and most neglected devision) , Apple better watch out.