Preston Gralla

Windows Phone 7 won't hit double-digit market share, says analyst

December 13, 2010 12:00 PM EST
Despite a flashy product launch and hundreds of millions of dollars in marketing planned to boost Windows Phone 7 sales, its market share won't reach even 10% in 2011, says a Goldman Sachs technology analyst. And the news for Microsoft gets worse from there.

Goldman Sachs technology analyst Sarah Friar wrote in a research note released this weekend that 2011 will be "more challenging year" than 2010 for Microsoft, according to the TechFlash blog. Top-line growth, she wrote, will fall to seven percent in 2011 from 12 percent in 2010.

The reason? Microsoft still hasn't figured out a tablet strategy, and Windows Phone 7 will make little headway against Android and the iPhone, not even reaching double-digit market share. According to TechFlash, here's what Friar wrote:

"A tablet response is still not forth-coming and our early read on Windows Phone 7 has not yet changed our view that Microsoft's share in mobile OSes will remain at only the single-digit level. For an unlocking of shareholder value, we continue to look for a more aggressive dividend, a more focused consumer strategy, and stronger Cloud-Azure traction."
The Windows Phone 7 launch has not gone the way Microsoft planned, and has been hurt by poor sales, the indifference of some retailers, and spot product shortages.

Microsoft itself recently admitted that Windows Phone 7 will lag behind Android and the iPhone for years, when Microsoft's Director of Windows Phone Program Management Joe Belfiore told Walt Mossberg at the D: Dive Into Mobile event that it could be a "couple" of years before it catches up.

Just as problematic for Microsoft is its lack of tablet strategy to counteract the iPad and Android tablets.

Microsoft will remain an immensely profitable company even if it doesn't succeed with Windows Phone 7 and tablets. But that lack of success would mean that Microsoft's growth days are behind it, because the future belongs to mobile.