GMP Update from 3GSM show

Here is GMP Securities’ note today from the 3GSM conference in Europe:

3GSM – Microsoft pulls ahead

One of the most interesting developments of the day was the evidence presented by Microsoft on its recent mobile efforts. Microsoft just completed an analyst briefing and reported that sales during calendar Q4 2006 was 3 mm units (consider that RIM7 shipped 1.8 mm units last quarter). This compares to 6 mm units shipped during all of F06 (June/06) and 3 mm in F05. Microsoft now has 125 operator customers on over 140 devices.

Microsoft also disclosed that they now boast over 120 enterprise deployments of over 1000 units and 30% of these were competitive wins from existing RIM customers. Microsoft clearly indicated that it is beating RIM on new, large deployments as well displacing them from existing accounts. Microsoft also indicated that at Cingular the new Samsung BlackJack with Microsoft is outselling all BlackBerry devices combined.

Microsoft also launched Windows Mobile 6.0 today. The new operating system has many new features (some are subtle like a Vista look/feel, presence, access to global contact list, last communication to each contact, account wizard for email support) while others like full HTML email support and VoIP are more meaningful.

In our view, the implications above are negative from a RIM perspective. Microsoft is increasing the viability of its competing solution and is able to leverage the innovation of its 48 device partners. We currently rate RIM a HOLD with a target price of $128.25 based on 25x F08 EPS of $5.13.

MRM