|Microsoft CEO Steve Ballmer gestures during the "Windows Phone 7" presentation at the Mobile World Congress in Barcelona on Monday.|
REDMOND, Wash. ( TheStreet) -- Microsoft ( MSFT) may be playing catch up to Apple ( AAPL) and Research In Motion ( RIMM) in the smartphone OS race, but its newly-launched Windows Phone 7 could provide Microsoft with a much-needed mobile boost. Microsoft's new smartphone OS was launched in a blaze of publicity at the Mobile World Congress event in Barcelona on Monday.
"It is too early to make a call whether Windows Phone 7 will help Microsoft to stabilize/gain market share in the smart phone market, but it is an impressive good start," wrote Sandeep Aggarwal, an analyst at Collins Stewart, in a note released on Tuesday. The analyst reiterated his Microsoft buy rating and $38 price target. Expected to arrive on the market before the 2010 holiday season, Aggarwal says that Windows 7 is crucial for Microsoft. "Mobile Internet is an extremely large emerging opportunity," he wrote. Operating systems with pre-installed features such as mobile search are key to tapping this market, added the analyst. Based on a new version of Windows, the operating system aims to claw back share from BlackBerry, Apple's iPhone OS and the Symbian operating system, which is used by Nokia ( NOK). Google's ( GOOG) Android operating system has also increased the pressure on Microsoft, as the search giant racks up an increasing number of smartphone partners. Microsoft's previous mobile operating systems have left the company in fourth place in the smartphone race, behind Symbian, Blackberry and Apple, according to Collins Stewart. Windows Phone 7 aims to redress this imbalance, and Microsoft already lists a slew of companies, including AT&T ( T), Verizon ( VZ), DELL ( DELL) and HTC as its Phone 7 partners.
The tech bellwether will also offer a number of 'hubs' on Phone 7, which combine Web and application content onto a single screen. This could be used by gamers using Microsoft's Xbox LIVE on their smartphone, or music content downloaded from a customer's PC. "Microsoft is comparing its efforts with Windows Phone 7 to the transition from DOS to Windows in the 1980's," wrote Katherine Egbert, an analyst at Jefferies & Company, in a note released on Tuesday. "They believe that hardware developers and application providers are likely to coalesce their efforts around a few standard OS platforms." The software maker's stock rose 38 cents, or 1.36%, to $28.28 on Tuesday, mirroring the broader advance in tech stocks that saw the Nasdaq rise 1.03%. -- Reported by James Rogers in New York