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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.



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is focusing on improving its entertainment and devices business, including its PC gaming device Xbox, the Zune portable media player, as well as its Windows mobile operating system. Together they account for just under 10% of Microsoft's stock value by our estimates.

While Windows phone 7 hasn't generated as much sales as expected since its launch last year, management is confident that Windows 8 will be able to provide the much needed boost to its sales to help challenge



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Android and



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iOS. Meanwhile, Microsoft will also earn hefty income from the licensing deals signed with seven smartphone vendors.

While we anticipate Microsoft's revenues from PC games, Windows Mobile and other consumer software will increase from $2.9 billion in 2012 to $3.9 billion by the end of our forecast period, Trefis members expect an increase from $3.2 billion to $4.7 billion during the same period.

We currently have a

Trefis price estimate of $28 for Microsoft's stock

, about 15% above the current market price..

After a strong Windows 7 Phone launch in the initial few months after its October 2010 debut, sales have slowed down. Market research firm AC Nielsen estimates that Windows Phone 7 accounts for just 1% of the mobile market vs. 38% for Google's Android, 27% for Apple's iOS and 21% for RIM, as of June 2011.

However, Microsoft recently showed developers a preview of Windows 8 and is quite optimistic that the new OS, with its radically different look and feel and a touch-centric user interface, will boost Windows phone 7 sales. It is also planning to launch an app store, in a nod to the success of Apple's powerful ecosystem of products and distribution platform for apps and updates.

Moreover, with Google acquiring Motorola, Microsoft remains the only pure smartphone software provider which should make it a better alternative over Android and iOS and thereby attract more smartphone vendors.

Microsoft has a total of 7 Android patent licensing deals with the last two coming from Acer and ViewSonic. (Click


for a previous article on the subject matter.)

Under these agreements, the companies will have to pay Microsoft a fixed licensing fee for each Android device that they ship. It also has deals with manufacturers like HTC, General Dynamics, Wistron and Onkyo from whom it nets around $5 to $15 for each Android device sold. In this way, it can also encourage these manufacturers in using Windows Phone 7 over Android.

Our complete analysis for Microsoft's stock is


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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.