Securities Analyst Evaluation of Windows Phone 7

Financial analyst reaction to Microsoft Windows Phone 7 operating system, as reported by the Wall Street Journal:

Bank of America Merrill Lynch: With WP7, [Microsoft] intends to gain customer mindshare which it hopes to translate to higher unit sales and smartphone OS market share. The momentum it can garner in the mobile space remains to be seen but MSFT appears to have a good start.

Morgan Stanley: While there is risk that MSFT is too late to the market, with positive reviews and ~$400M in marketing spend, MSFT may be able to curb or reverse share losses next year, which would be positive for the stock given extremely low expectations.

Wells Fargo Securities: While it has become fairly fashionable to kick MSFT, we think it is fair to say that the new phone looks pretty good. In our view, this isn’t going to move the market share needle in the short term and the absence of Sprint and Verizon at the launch is notable (2011 launches). We are the first to admit that Microsoft is fighting for 3rd place not 1st or even 2nd at this point, but we believe this is a key step toward rebuilding confidence in their ability to innovate in mobile and eventually restoring their earnings multiple.

Cross Research: We think the advantage that the company has is its ability to integrate deeply into its own popular apps like Word, Excel and Powerpoint, but also with Outlook email and calendar content.

Barclays Capital: While a credible offering, we believe Microsoft faces uphill climb in quest for market share given its late entrance to an already crowded field, an already weak reputation in the smartphone market and a lack of developer and application support which may limit consumer acceptance, at least initially.

Windows Mobile 7 Tries to Make Phone Use Easier

In a bit of a twist, it is Microsoft that now wants to offer consumers an "easy to use" smartphone, much as Apple once promised an "easy to use" PC.

Universal, Blockbuster Express to Test Earlier Movie Release Window

Universal Studios Home Entertainment movies will be available at Blockbuster Express kiosks 28 days after initial release in theaters, on the same days those new movies are made available for retail purchase, NCR Corp. and Universal Studios say.

The market test will attempt to assess whether the ability to rent a movie recently in theaters, about 30 days earlier than has been possible in the past, is valuable enough to entice consumers to pay extra.

The new premium release window will be tested at some Blockbuster DVD rental kiosks, and will test a higher price point, possibly about $3 for a one-day rental, compared to the $1 price point for movies available for rental using the standard DVD rental release window.

As part of the arrangement, Universal will directly supply NCR with new release DVD and Blu-ray titles effective immediately, beginning with "Robin Hood" and "Get Him to the Greek."

"By implementing a 28-day window agreement with NCR, we are able to provide consumers with what they want –additional access and options in movie rentals for some of Universal’s newest and most popular titles," said Craig Kornblau, president, Universal Studios Home Entertainment. "Our agreement to test premium day-and-date offers and new DVD sales will help us identify new outlets for our movies while giving our customers the flexibility and choice they want in their entertainment purchases."

Many content owners have, as you might guess, been unhappy with the $1 price point of Redbox rentals, arguing it devalues the product. The earlier release window offers a chance to move price points higher.

Is Digital Behavior Gap Growing?

Over time, differences in technology adoption across generations or between regions tend to close. So some might argue the differences between younger users and older users in the U.S. market suggest a gap is widening.

Others might argue the differences in adoption only mean older users are going to start using the same tools younger users favor.

Gen Y is particularly mobile savvy, Forrester Research notes. Some 85 percent of consumers in the Millennial demographic regularly send or receive text messages, compared with 57 percent of all US consumers over the age of 18.

About 27 percent of Millennials access social networks on their mobile devices (compared with 14 percent of all US consumers) and 37 percent of Millennials access the mobile Internet, compared with 23 percent of all US consumers.

I tend to think this means older demographics increasingly will adopt those behaviors as well. It seems to have happened with virtually all earlier online and mobile behaviors, and one would do well to bet with the historical trend, rather than against it.

Forrester Research

Social Networking Grows, Content Creation Doesn't

Social networking continued to grow over the past year, but content creation did not, Forrester Research says.

The number of people who joined social networks increased by 11 percent in Europe, 18 percent in metro China, and 11 percent in Australia. By comparison, North America saw slightly less growth, with only an 8 percent increase.

On the other hand, between 2009 and 2010, no markets exhibited growth in the number of people who create social content.

"A lack of growth in social creation translates into a lack of fresh ideas, content, and perspectives," says Forrester Research Consumer Insights Analyst Jacqueline Anderson. "For example, one third of online consumers in the US regularly watch user-generated videos on sites like YouTube.

But, only 10 percent of US online consumers upload videos they've created to public sites. The traits required to create social content are unique, and at this moment, the consumer market interested in these behaviors has plateaued, Anderson says.

Forrester Research

Lies, Damn Lies and Statistics

There has been lots of chatter about the degree of job creation over the past two or so years, with some observers commenting that the current administration is doing much better than the former presidential administration at creating jobs.

click on images for larger view.

The old adage--that there are lies, damn lies and statistics--applies here, for the careful. All the first graph shows is that there has been a steep and deep recession.


The claim that the current administration already has created more jobs than the former administration clearly is false. That would require foreknowledge of the actual rate of net job creation (new jobs minus lost jobs) for the entire year of 2010, and all we have now are projections.


If one assumes the current rate of job creation--290,000 net new jobs for the remainder of 2010--the net job loss since the start of January 2009 would be 1.8 million, the sum of 4.7 million lost jobs in 2009 and 2.9 million potential jobs created in 2010.

In other words, the number of net jobs during the current presidency during the period 2009 to 2010 would be a loss of 1.8 million.

The other Bureau of Labor Statistics shows job creation over a wider period of time. The years 2000 to 2008 were no picnic,showing a rate of job growth far lower than we had seen in prior decades. That suggests a structural change of some sort. But the data also suggest why the "jobs created" claims have to be seen over a broader time span.

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Is Social Media a Fad?

Hardly anybody thinks so, but it is worth asking the question, I suppose.