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The Party With the Most to Lose This Fall is Microsoft

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Forget about Mitt Romney and Barack Obama for a minute.

The candidate who should be most nervous this fall is Microsoft (MSFT) CEO Steve Ballmer.

Starting with Wednesday's Nokia (NOK) press conference, which TheVerge.com is already hyping, Ballmer begins the process of finding out whether Microsoft has a future.

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The official launch of Windows 8 in October, which folks like TechNewsWorld are already writing about, is not nearly as important as the fate of Windows 8 Phone. That's because, as previously noted, the transition from "feature phones" to "smart phones" has been happening twice as fast as the Internet transition of the 1990s, 10 times faster than Microsoft's own rise with the PC in the 1980s.

We're late in that game, and the question is whether there is any room for a third player, no matter how insanely great it may be.

Microsoft's best hope is to knock Google's (GOOG) Android off its perch, and a key punch was delivered there by Samsung (SSNLF) last week. As CNET reported, Samsung has a new Windows Phone called the Ativ and promises to compete fiercely with Nokia for Windows Phone share.

The Ativ announcement comes just a week after Samsung lost to Apple (AAPL) over claims its Android gear violated Apple's patents. During the trial, an Apple executive revealed it had made patent peace with Microsoft, as ReadWriteWeb reported, with Cupertino considering Windows 8's look-and-feel to be unique.

But this only works if Samsung, which is also Android's largest OEM, and Nokia, whose CEO bet his company on Microsoft Windows last year, can both succeed in the market.

To that end,TechNewsWorld reports that Microsoft will launch a $1 billion ad campaign over the next three months. To put that number in perspective, it's twice what the presidential campaign has cost so far, in terms of advertising, according to an NBC FirstRead story last month.

So there will indeed be a third party on the ballot this fall: The Microsoft party. You will be asked to vote for it with your wallet. As with other third parties, the aim must be to get out of the single-digits in market share, in order to be considered "viable."

Failure will not destroy Microsoft. It will relegate the company to a position similar to the one IBM (IBM) had after Microsoft beat it in consumer operating systems 20 years ago. It will be limited to the business computing market, and its brand name will diminish.

This will leave it vulnerable to attack by that same IBM, which has since used Linux and open source to unify its software environments and become a major player in the other area Microsoft must succeed in to survive, the cloud.

If Windows 8 Phone fails, Microsoft will truly be subject to a squeeze, from Apple on the consumer side and IBM on the business side, with Google pressing in on both sides. Ballmer's decade-long run as Microsoft CEO will have to be considered a failure. He would go down in corporate history as Microsoft's Herbert Hoover or, if you're a Republican, Microsoft's Jimmy Carter.

Windows 8 Phone had best not fail.

At the time of publication, Blankenhorn was long MSFT, IBM, GOOG, and AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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