MICROSOFT: First We're Going To Destroy Apple's iPhone In China, Then We're Going To Clobber Google's Android

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Photo: Ellis Hamburger, Business Insider

Microsoft Corp., the world’s largest software maker, said its Windows Phone operating system will propel it past Apple Inc. in China’s smartphone market as its partners release devices costing as little as $158.Passing Apple is an “interim goal” as the company’s longer-term objective is to supplant Google Inc.’s Android as the local market leader, Simon Leung, Microsoft’s chairman and chief executive officer for the Greater China region, told reporters in Beijing today.

He didn’t give a time frame for reaching the targets.

“We will continue to drive the price down,” Leung said. “Our goal is number one. Having a goal to be number two is not really a goal.”

China is poised to become the world’s biggest smartphone market in 2012, making it crucial for manufacturers and sellers in the battle for sales. Shipments of the devices, used to download games and movies, will jump 52 per cent to 137 million units in China this year, allowing the country to overtake the U.S. for the first time, research company IDC said.

Microsoft’s manufacturing partners will “definitely” offer devices in the price range of 1,000 yuan ($158), Leung said, without specifying which partners or devices would meet the target. Rather than make its own phones, Microsoft supplies software to handset manufacturers including Nokia Oyj, Samsung Electronics Co., HTC Corp. and ZTE Corp., Leung said.

Developing Markets
Microsoft plans to bring its Windows Phone software to 23 more countries for a total of 63 and put the operating system on less expensive smartphones, it said last month. The company aims to move quickly in developing economies, where Google and Apple are less dominant, before cheaper Android phones can strengthen Google’s position.

Windows Phone will account for 7.5 per cent of the China market this year, trailing the 12 per cent share of Apple’s IOS and Android’s 70 per cent, said Teck-Zhung Wong, a Beijing-based analyst at IDC. By next year, Windows will have risen to second place in China with a 15 per cent share, surpassing Apple’s 13 per cent while still trailing Android’s 66 per cent.

“The Windows Phone ramp-up in China won’t really begin until the second quarter, so the numbers are still low,” Wong said. “From next year the ramp-up will be more rapid.”

By 2016, Windows Phone will have a 20 per cent share in China, ahead of Apple’s 16 per cent and trailing Google’s 60 per cent, Wong predicted.

‘Fresh Proposition’
Windows Phone will gain market share from Apple because it represents a “fresh proposition” as an alternative and will also feature in a wider range of devices, Wong said.

“Windows Phone will have a lot of equipment manufacturing partners and more device choice at more different price points,” Wong said. “That alone, as opposed to what Apple is doing, will give Windows Phone an advantage.”

Leung, who spoke before a ceremony to unveil the new Windows Phone 7.5 operating system in China, said the company is exploring the possibility of opening its own retail stores in the country.

He also said he met with senior Chinese leaders yesterday to discuss the nation’s ban on game consoles including Microsoft’s Xbox, without making any progress.

The ban is “a little bit frustrating,” he said.


–Edmond Lococo. Editors: Terje Langeland, Lena Lee

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at [email protected]

To contact the editor responsible for this story: Michael Tighe at [email protected]


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