Microsoft Corp. (NASDAQ:MSFT) said its goal is to double the number of mobile phones that run Windows. At the end of 2005, that number was six million, so they may hit 12 million. Among the competitors is Research in Motion Ltd. (NASDAQ:RIMM) and its Blackberry. RIMM has six million users and wants to double that number each year.
In other words, everyone wants their business to double. Nice work if you can find it.
The problem with all of this is that there will be over 970 million cell phones sold this year, which represents a growth rate of about 20% over 2005. But, that growth may slow next year.
Why Microsoft wants to be in a one billion unit business with a 12 million unit presence is somewhere beyond easy comprehension. The company's operating system runs on 90% of PCs, so it is a market that makes tremendous sense. The company's Xbox business has significant share and some hope it would eventually pass the Sony Corp.'s (NYSE:SNE) Playstation as that company's fortunes flag further each day.
One of the beefs about Microsoft is that it too often violates the Jack Welch rule of being either No.1 or No. 2 in any market. Since Microsoft has had some success following that dictate, its presence in the phone business appears to have no strategic value and the company already has enough headaches.
Douglas McIntyre is a partner at 24/7 Wall St.
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