How Microsoft Can Pivot Windows Phone Into A Relevant And Respectable Smartphone Platform


Ewan Spence, Contributor

August 20, 2014

Let us do a little thought experiment. Bear with me here, but do follow along in your head. If Windows Phone was selling thirty million units a month, most people would probably count that as a success. If Microsoft’s mobile platform was managing thirty sales a month, it would be an abject and embarrassing failure. Somewhere between those two numbers is a turning point, where Windows Phone becomes a sensible and smart thing to do.

Notice I’m focusing on unit sales here, and not percentage of the market. The latter’s ship has sailed, with Android and iOS so far ahead of the competition that it would be unfair to label everyone else as competition and giving them a crumb of comfort (and that includes Microsoft). The dream of the third ecosystem is alive, but it is a comparatively small ecosystem in the 2014 marketplace.

The bottom line is that the smartphone market has settled into a twin-town party. Some industries can manage to have three major players, but with smartphones the settled opinion, at least in the west, appears to be a for mass-market option that is ‘good enough’ (which would be Android), and a high-end aspirational brand (Apple). Everyone else can scrabble around for the remaining few percentage points that will not trouble the incumbents.

Where does that leave Microsoft? This is where I come back to the point of an acceptable level of sales for the company. While they will continue to be bullish in public, the only realistic prize left for them is ‘best of the rest’ and to be the strongest niche player possible.

I do think that, given the right circumstances, there was a point where Microsoft could have driven Windows Phone hard and become a major mobile player. With the rising adoption of the platform seen at the start of 2013, matching iOS at the very least looked very difficult but achievable.

Since then, circumstances have been against Redmond. From the continued improvements in Android in retail, hardware, and software; to a renewed focus from Apple; the competition has become significantly stronger. At the same time, Windows Phone as a platform was crippled by the sale of Nokia’s Devices and Service division to Microsoft. This distracted Redmond and Windows Phone’s primary handset manufacturer – both of which had to assume for regulatory reasons, that the deal would not go through.

Alongside the announcement today of HTC’s latest Windows Phone handset – a reworked HTC One running Microsoft mobile OS – I am expecting the announcement of some new Lumia branded handsets at the IFA event in Berlin next month (Microsoft is using Nokia’s former brand for name recognition). Then we’ll see just how much ground the Windows Phone team has made up since the last major handset announcements at the start of Q4 2013.

What is clear is that in the intervening time, millions of consumers have went to Android and iOS. Those consumers are effectively lost to Microsoft, and the number of consumers that are open to Windows Phone is dwindling every day.

Switching operating systems is hard. It’s why so much emphasis is placed on getting people in the door and starting with a platform (or in the case of Android, a single manufacturer). Once you are on a platform buying content, sharing data, and using the cloud services; the chances are you are going to stay with that platform for your subsequent handsets. If someone has decided on Android or iOS, the acquisition cost for Microsoft to get them onto Windows Phone would be uneconomical no matter the scale.

Microsoft’s goal should no longer be one of conquest (at least in the short-term), it should be one of relevancy. It should be one that allows them to have a modest level of sales that does not break the bank, that allows the company to retain a strong competency in the smartphone space, and one that is not a net drain on company resources.

There are three areas that Microsoft should focus on. The first is to work with the manufacturers and carriers and reduce the barriers of entry to Windows Phone as far as possible. The removal of a paid licencing fee for Windows Phone, along with new hardware reference designs, is a major part of this strategy and it is already having an effect with more licencees signing up to use Windows Phone. Whether they will be in volume, or just a defensive ‘lets try to understand this platform’ remains to be seen, but the interest is there once more. It must be fostered and encouraged.

The second is to continue the expansion of Microsoft’s products and services, especially those focussed on cloud computing, to Android and iOS users. By holding back on applications like Office and Exchange, Microsoft has allowed the competition to build up momentum. Yet there is still a demand for these familiar apps, as witnessed by the stellar performance of the Office Mobile apps for iOS. Embracing the other platforms allows Microsoft to bring people into their cloud. While it might not be the primary account, it will make Windows Phone more attractive when the time comes to upgrade (and if not, Microsoft still has a cloud user, and that’s worth a couple of dollars per year per user).

Finally they need to project an air of confidence in the mobile product. Over the last year the mobile team in Redmond has had to take a reactive approach, thanks to the aforementioned purchase of Nokia’s Devices and Services division creating a chinese wall for regulatory reasons, and then working on the integration of the former Nokia employees into the company. With the launch of the new handsets coming up, it’s time for Microsoft to put the best show possible forward to promote Windows Phone.

Will it be the number one platform? Almost certainly not. Can it get close to iOS? Not in the short or medium term. Can it turn a profit, bring customers to Microsoft services, and provide Microsoft with a respectable and mature product line? That should be an achievable goal. Once that is reached, Microsoft can build for the future. It mightn’t be the bright dominating future they expected four years ago, but it is a future, and not many manufacturers and operating system developers  from the last few years can say that.

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