Microsoft Targets Long-Term Growth With Free Windows Mobile OS
BMI View: We believe Microsoft's Windows Mobile 8.1 OS will continue to struggle in the Middle East's Consumer Electronics (CE) market in the short term, despite the free licence offer and the potential for windows-based devices to become more price-competitive on the back of a possible decline of their average selling prices (ASPs). Our view is based on Microsoft's late arrival in the mobile OS market as well as Windows Mobile's weak apps ecosystem, especially for Arabic content, compared to its major rivals.
The Middle East has a very vibrant smartphone and tablet market, driven by the rapid development of 3G/4G networks and Wi-Fi hotspots across the region, particularly the GCC states. Tablet sales rose by 82% y-o-y in Q413, according to IDC, compared to a 9.7% y-o-y decline in PC sales in FY13. Some of the leading local OEMS, including Touchmate, Prestegio and HCL, have recorded strong volume sales, especially with low-cost models. The uptake of 3G/4G subscriptions across the region reflects the growth trajectory of the smartphone market. 3G/4G subscription as a proportion of total mobile subscriptions exceeded 40% in the UAE at the end of 2013, according to BMI data, and is forecast to rise to nearly 80% by 2018.
Microsoft is keen to tap into this growth by allowing OEM partners and white label brands to install the Windows Mobile 8.1 OS on their devices for free. The company revealed the offer at the Build 2014 conference in the US on April 2 2014 and introduced it to OEMs in the Middle East at an expo for the members of the Dubai Computer Group (DCG) in May. According to Microsoft, OEMs and white label brands will be able to install the OS on smartphones and tablets with screen sizes of 9-inches or below. Microsoft's move is part of a strategy to gain a foothold in the mobile devices OS market, which is currently dominated by rivals Apple and Google through their respective platforms, iOS and Android.
|Microsoft Wants A Bigger Share|
|UAE Handset Sales Growth|