iPhone could be the financial survivor in Android and Windows Phone 7 war

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Needham & Company analyst Charlie Wolf believes that the iPhone could emerge as the big survivor as Android and Windows Phone 7 battle it out in a race to the bottom. Wolf expects that Google and Microsoft will be battling aggressively to keep phone makers building devices with their respective software platforms and those manufacturers will probably slash prices in an attempt to get market share. The result is expected to be significantly decreased margins for everyone but Apple. This could mean a scenario similar to the computer market where commodity Windows computers hold the vast majority of the market, Apple uses its highly polished products to stay far and away the most profitable computer maker.

In a new research note to investors, Wolf declared that the launch of Microsoft's new phone OS has been successful despite what appears to be very slow sales after less than two months on the market. According to Wolf there were 135,000 active users of the Windows Phone 7 Facebook app, which he sees an indicator of sales in the absence of actual numbers from Microsoft. Wolf expects the Windows numbers to grow as a result of Microsoft spending a substantial amount of its $500 million phone marketing budget on keeping phone manufacturers and developers in the fold.

While Android is roaring along with 300,000 activations a day right now, it is expected to take a hit if and when the iPhone arrives on Verizon's network. However, what Wolf doesn't really address is how AT&T will respond to losing Apple exclusivity. It's possible that it will put more of a push behind rival systems, helping them to increase their share at the expense of some profitability for the manufacturers and OS developers.

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