On October 26, Microsoft Corporation (MSFT) will release its much-anticipated Windows 8 software. Microsoft shareholders, of course, hope that this new Windows 8 program will serve as the backbone of a lucrative ecosystem that includes personal computers, tablets, and smartphones. Microsoft's plans are being orchestrated as a direct challenge to Apple Inc.'s (AAPL) dominance over the consumer electronics market. As a group, the Microsoft supply chain is now hell bent upon developing a beachhead telecommunications device that can match the Apple iPhone and its revolutionary appeal.
To date, the Nokia Corporation (NOK) Lumia 920 and Samsung ATIV S Windows 8 phone prototypes have already been unveiled for public consumption. The silence surrounding these Windows 8 phone events is remarkably deafening, in comparison to the hysterical response over the iPhone 5. Yet again, Apple is set to unleash another "must-have" product onto the marketplace. After the smoke clears, Microsoft will remain a beta stock that tracks the S&P 500 and pays out healthy dividends. Alternatively, "fan boys" must recognize that the Apple's story stock cannot trend upwards ad infinitum. Most likely, the iPhone 5 will symbolize Apple's last hurrah as an aggressive growth investment.
The Apple Ecosystem
Apple's devastating "I'm a Mac - I'm a PC" campaign effectively frames the terms and conditions for today's consumer electronics battleground. In a series of advertisements, Apple personifies itself as a chic, yet functional hipster who is eager to please. Alternatively, Microsoft is a bespectacled company man in a tweed suit who cannot get out of his own way. The "I'm a Mac - I'm a PC" series of advertisements highlights a Steve Jobs halo effect that extends over Apple's closed and horizontally integrated iMac, iPod, iTunes, iPhone, and iPad machines. In Wall Street parlance, this halo effect would be described as "goodwill."
According to nominal financial metrics, the iPhone platform is the primary driver behind Apple's growth story. For its latest third quarterly period ended June 30, Apple reports 26 million in iPhone unit sales. This sales activity calculates out to 28% year-over-year growth in iPhone shipments. In terms of revenue, the iPhone accounted for $16 billion of Apple's $35 billion in Q4 2012 total net revenue. This performance is especially remarkable, considering the fact that Peter Oppenheimer, CFO, claims that Apple enthusiasts are holding off on purchases in anticipation of the iPhone 5 launch.
Apple's $620 billion market capitalization is much indicative of a smartphone duopoly dominated by iOS and Google Android. A recent comScore report
estimates that the iOS and Android platforms combine to garner an 85% share of all smartphone subscriptions. This data is juxtaposed against an environment where Samsung and Apple account for 26% and 16% of total handsets sold, respectively. Rivals Samsung and Apple now wage smartphone warfare in the courts. Recently, a California jury ordered Samsung to pay Apple $1.05 billion in damages, while a Japanese court ruled Samsung innocent of patent infringement charges.
Contradictory Apple versus Samsung verdicts will only confuse the smartphone market and do little to help the cause for Microsoft Windows 8. In terms of smartphone subscriptions, Nokia,
Research In Motion
(RIMM), and Microsoft are all bottom feeders battling over the remaining 15% share of the smartphone subscriptions. Without a blockbuster Windows 8 launch, Microsoft will be unable to alter the current dynamics of the smartphone duopoly and improve upon its meager 3.6% market share.
Windows 8 and Apple iPhone 5 Specifications
According to Dan Costa and PC Magazine, Microsoft is taking a "huge gamble" that consumers will appreciate the fusion of traditional personal computer, smartphone, and tablet interfaces beneath one Windows 8 umbrella. For example, a Windows 8 user will be able to execute desktop commands via touchscreen, before picking up his smartphone and toggling through tile icons for Word and Excel. To stoke demand, Samsung and Nokia are both now falling all over themselves to demonstrate Windows 8 phone prototypes at technical trade shows. Samsung's ATIV S and Nokia's Lumia 920 are both scheduled for a Holiday Season launch.
On August 29, Samsung unveiled its ATIV S as the first Windows 8 phone handset at IFA in Berlin. This phone is notable for its brushed aluminum finish, which is an aesthetic upgrade above Samsung's standard plastic look.
Weighing in at 135 grams, this Windows 8 phone stands 5.4 inches tall by 2.8 inches wide. The Samsung ATIV S features a 4.8-inch, Super AMOLED screen capable of displaying 16 million different colors at 720 by 1280 resolution. As a camera, this Samsung handset records 1080p video at 30 frames per second and takes pictures with the help of an 8-megapixel sensor.
Earlier this month, reactionary Nokia was to present its very own Windows 8 prototype at a New York City demonstration. Nokia promotes its Lumia 920 as a phone "designed to wow," and manufactures this handset in five separate available colors. In terms of dimensions, the Nokia Lumia 920 is more compact and heavier than its Samsung ATIV S competitor. Besides its physical appearance, however, the 920 features technical specifications, such as an 8.7-megapixel camera and Nokia Music Store that may be described as standard equipment for the smartphone market. Qualcomm's dual-core 1.5 GHz Snapdragon S4 processor powers both Nokia and Samsung Windows 8 offerings.
Windows 8 phones have yet to impress Wall Street. On September 5, cynical traders sat through Stephen Elop's Lumia 920 presentation, while simultaneously entering orders to dump Nokia stock at a 15 percent loss on the session. Juxtaposed against Apple, Nokia's staggering decade-long collapse towards yesterday's $2.88 per share price highlights a changing of the telecommunications guard. The beat goes on, as reports out of ABC News, AT&T, and Apple all indicate that the looming iPhone 5 release will shatter sales records.
On Friday, September 21, the iPhone 5 is set to launch. In all likelihood, metropolitan Apple Stores will effectively transform into see and be seen nightclubs. Aesthetically, the sleek iPhone 5 is an extension of both the Samsung Galaxy SIII and Microsoft Surface tablet, where Silicon Valley design teams are now embracing a vertical, yet thin look. The svelte iPhone 5 measures 7.6 millimeters in thickness and weighs in at 112 grams. Apple's latest handset stands 4.8 inches tall by 2.3 inches wide. The Apple iPhone 5 features a 4-inch screen that displays graphics at 640 by 1136 resolution.
James Kendrick and ZD Net describe iPhone 5 technical specifications as "evolutionary," if not "disappointing." Apple's new A6 processor and iOS 6 offer slight improvements in performance. The iPhone 5 converts into one 8-megapixel camera and separate recorder that plays back 1080p video at 30 frames per second. Apple's new dock connector, Lightening, arguably generates as much buzz as any other iPhone 5 feature. Lightening is 80 percent smaller than the 30-pin 4S dock connector. This change forces consumers to either upgrade their Apple peripherals, or purchase adapters for each existing device. Apple's Lightening Adapter now retails at the Apple Store for $29.
In anticipation of the iPhone 5 launch, phone carriers have already slashed 4S prices down to $99, if you agree to the terms and conditions of a two-year service contract. With a contractual agreement, network carriers will offer the 16GB iPhone 5 for $199. 32GB and 64GB iPhone 5 models retail for $299 and $399, respectively. The iPhone 5 launch is shaping up as a sales bonanza, despite the objections of tech gurus who rail against Apple's slight and linear progression of handset improvements.
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