LG-Microsoft Good For The Smartphone Market?

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If LG Electronics is simply looking to be in the spotlight or to receive a big investment, the selection of Microsoft for its Smartphone business may not necessarily yield successful results.

Last February, LG Electronics and Microsoft announced their cooperation in the Smartphone business. LG said that it would launch over fifty types of Smartphones with Microsoft by 2012. Considering that LG has only released two or three different Smartphone models so far, the company’s future Smartphones will be almost entirely Microsoft Windows mobile-based products.

Unfortunately, the current market is unfavorable to the Microsoft Smartphone platform. Microsoft was not even listed in the Top 5 vendors of Smartphone operation system providers during the first quarter in the United States. Operators pay no attention to Microsoft due to the emergence of a new dark horse, Android. The main reasons why mobile operators avoid the Microsoft Windows mobile operating system are its high cost and poor performance, particularly compared with an open source-based operating system such as Android.

The Taiwanese Smartphone maker, HTC, which was the main provider of the Microsoft Windows mobile-based Smartphone, has successfully escaped the shadow of Microsoft by embracing Android. The company’s Android phone, G1, was the fifth best-selling Smartphone in the U.S. market during the first quarter. Moreover, HTC’s Android phone is expanding its presence not only in North America, but also in Europe and Asia.

Why has LG tried its luck with Microsoft? LG was most likely promised a massive investment from Microsoft. In 2007, when LG won the “3G for All” project backed by GSMA, the company received an investment from Qualcomm. Although the project failed, LG’s loss was reportedly insignificant.
Microsoft requires the services of one of the major handset makers to expand its Smartphone business. Only time will tell whether the collaboration of LG and Microsoft is successful.

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