Microsoft to Launch Windows 7 Smartphone!!!

Just days before tech giant Microsoft is set to launch its first Windows 7-enabled smartphone, the company has been rocked by a scathing report from Wall Street giant Goldman Sachs which says the company's fortunes are unlikely to improve until it builds a foothold in the booming tablet and smartphone markets.
The report, by analyst Sarah Friar, pushed Microsoft shares down 2% in overnight trade to $US23.83, and have now fallen 23% since April. By contrast, Microsoft's great rival Apple has seen its stock rise 6% in the same period. Friar sighted a number of concerns about Microsoft's future, and warned these were "not just a this-year issue".

Top of the list are concerns that the PC refresh cycle – that is, the cycle during which consumers trade up to new computers – has become more elongated, with evidence also suggesting that many consumers are now turning to tablets rather than notebooks and laptops.

And unfortunately for Microsoft, it simply doesn't have a competitor in the tablet space. "We believe that top-line momentum and hence investor sentiment on Microsoft's core Windows and Office franchises is unlikely to improve until the company gains a firmer foothold in the growing migration to mobile devices – both smartphones and tablets," Friar wrote. "We don't see this happening this year, as Apple's iPad and iPhone plus Google's Android operating system are well established."

While Friar acknowledged the company was set to launch a Windows 7 smartphone (an event in conjunction with carrier AT&T will be held on October 11), Friar argues the entrenched positions of Apple, Google and Blackberry mean that for "Microsoft to gain credibility in mobile, we believe the company will need to see immediate success". On rumours that Microsoft is preparing to launch a Windows 7-powered tablet computer, Friar was dismissive. "We do not believe a Windows 7 tablet built on an Intel processor is currently able to compete."

Friar also suggested the company should boost its dividend to try to get a bit of spark in the share price, and also floated the idea of spinning off the company's Xbox gaming business. The key, Friar argues, is that the tech giant must do something. "We believe the intrinsic value of shares cannot be unlocked if the status quo remains."