U.S. Cellular (USM), the leading telecom service provider has launched its HTC 7 Pro smartphone. This also marks U.S. Cellular’s debut into the Microsoft (MSFT) Windows 7 platform.
The smartphone will cost around $199.99 after a $100 mail-in rebate and features a 3.6-inch screen, slide-out Qwerty keyboard, 1 GHz Qualcomm (QCOM) Snapdragon processor and a 5-megapixel camera.
Last month, U.S. Cellular had introduced HTC Merge, based on Google’s (GOOG) Android 2.2 (also called Froyo) operating system. Now, HTC 7 Pro is expected to expand the company’s footprint into the Windows’ smartphones arena, which is dominated by companies like AT&T (T) and T-Mobile.
AT&T was among the first to use Windows7 through smartphones like Samsung Focus, HTC Surround and LQ Quantum followed by T-mobile, which launched HTC HD7 last year. This year, telecom giants like Sprint Nextel (S) and Verizon (VZ) have also joined the bandwagon by introducing smartphones like HTC Arrive and HTC Trophy.
This only implies that U.S. Cellular’s newly launched smartphone will not only face competition from smartphones backed by Android and Apple (AAPL) operating systems, but also from similar Window 7 smartphones marketed by its rivals.
However, we remain optimistic about the increasing demand for smartphones in the telecom market that will likely support U.S. Cellular’s market share gains in equipment sales. In the first quarter 2011, smartphone sales represented approximately 42% of equipment sales and are expected to remain a key driver of revenue in the future.
U.S. Cellular continues to expand its smartphone and Tablet arena and plans to launch its first 4G enabled smartphone packed with Android 2.3 operating system in 2011.
In addition to smartphones, U.S. Cellular offers bundled services like the very popular “Belief Plan,” which offers a compelling high-value portfolio of products and services. Its Premium Plus Family and Primary Plus Plan are also contributors to growth.
We currently have a long-term Neutral rating on U.S. Cellular. The company holds a short-term (1–3 months) Zacks #3 Rank (Hold).
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