Android Vs. Windows Phone 7: The Coming Mobile Battle

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Pyramid Research's claim that Windows Phone 7 will be the dominant mobile OS by the end of 2013 was greeted at best with polite skepticism, and more often with ridicule and vilification. But many of the responses ignore the grounds for the claim, especially that the smartphones market is a global one still in its infancy.

The controversy was sparked by the last line of a one-page report on global handset sales, projecting that Android will grow from 28% of the global smartphone market in 2011 to just over 45% in 2015. The last line reads: "However, we project that by 2015, Windows Phone will establish itself as the leader in the smartphone OS space."

[BACKGROUND: Both Nokia, Microsoft have much to gain, and lose, in mobile deal]

Pyramid forecasts a steep growth rate for Windows Phone 7 starting in 2011 through mid 2012, when it slows down. Much of that increase is expected to be fueled by a new generation of Nokia phones running the Microsoft mobile OS. By the start of 2013, Windows Phone 7 will overtake Android's market share and stay slightly ahead of it thereafter.

Pyramid senior analyst Stella Bokun, practice leader for mobile devices, followed up with a blog post that described Pyramid's research methodology but was short on explaining the reasons for the conventional-wisdom-defying forecast. In a phone interview with Network World, she expanded on the reasons for her optimism regarding Microsoft's reborn mobile OS, on which Nokia recently staked its smartphone future.

Her basic points:

  • In the global phone market, Nokia remains a highly regarded brand among consumers.
  • It retains close, strong relationships with wireless carriers, who make the decision of what phone brands to offer and promote.
  • Nokia has a proven ability to deliver low-cost, attractive phones.
  • Smartphone sales are just now ramping up, in huge new markets.
  • Nokia's position in North America is much weaker compared to most other markets.

In Pyramid's analysis, these realities will create a rising tide that will carry Windows Phone 7 into a dominant position.

Importantly, Bokun emphasizes that Android will continue its growth, almost neck and neck with Windows Phone 7. Both will gain market share over the next several years, with Android's rate of growth slowing, and Windows Phone 7's growth rate increasing especially in 2012 and 2013. Bokun's argument is that the market dynamics will give Windows Phone a slight edge. RIM and Apple will lose share over the next five years, even though they'll continue to sell lots of phones.

Earlier this year, IDC reported that Nokia was the worldwide top seller of all mobile phones in the fourth quarter of 2010. It actually increased its market share slightly for all of 2010, by shipping 453 million phones, up from 431.8 million in 2009. Overall fourth-quarter shipments dipped 2.4% compared to a year ago due to "intense competition" and a shortage of components. Yet Nokia smartphone shipments leaped 38% in the same quarter, compared to a year ago.

The conclusions sketched out in Bokun's blog post are an outgrowth of Pyramid's research methodology, which is based on local analyst interviews with carriers and handset makers in 51 markets around the globe. The analysts then derive local market projections, which then are rolled up into a global summary.

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