Microsoft admits that its mobile strategy is in “shambles.” In fact, one former Microsoft employee has advice for his former employer: “The real answer is, give up Windows Phone, go Android, and embrace and extend like you did with the Internet.” Granted, it is highly unlikely that Microsoft will simply give up on Windows Phone and move towards Android. But, what exactly can Microsoft do to fix their massive disappointment?
According to industry analyst Chetan Sharma, Microsoft is now quite close to being forced to abandon their Windows Phone due to a complete lack of return on investment. Although the Windows Phone has gained market share in Europe, it is largely irrelevant on a global scale with just a 2.7% of the market. It is not any better in the US with the Windows Phone owning just 1.3% of the smartphone market.
Microsoft has announced plans to cut 18,000 jobs, including 12,500 former Nokia workers, the largest restructuring in the company’s history. The software giant has also indicated it will focus more on Lumia-branded smartphones and growing the overall Windows Phone ecosystem than on feature phones, which it reportedly will discontinue selling. - FierceWireless
Microsoft was incredibly late to the party with their Windows Phone. As Sharma notes, Microsoft did not learn from the Microsoft Zune which (amongst many things) reinforced the notion that the market will punish companies and products for being late into a crowded market. A market that is currently telling Microsoft that despite the amount of money that they have thrown into into their Windows Phone, there is little need or want for another mobile OS.
However, the current data indicates that unless something changes drastically, windows phones might be on the verge of being “zuned out” of the market. And just like Zune, the fault will lie not in the product or the distribution or the marketing but rather in the timing of the market entry. Microsoft might be better off giving up on its device dream and just focus on services on top of the platforms that dominate. It might be time for hermit crab strategy. - Chetan Sharma
In the report, Sharma notes that Microsoft was basically forced into acquiring Nokia due to Nokia’s threat to adopt Android’s OS. Therefore, Microsoft “had no choice but to acquire the beleaguered company that has been just devastated since it picked up Windows as its primary OS.”
“After being in the U.S. market for more than two years with billions spent in marketing and distribution, 1.3% share is nothing to write home about. Microsoft can get better traction in markets where new-subs are entering the ecosystem vs. replacement markets like the U.S. However, what market is telling us is that despite the blood, sweat and tears that have been spent over the past few quarters, there is little appetite or need for another platform.” - Chetan Sharma
Microsoft released their Windows Phone back in 2010. It was late to the party then and continues to be in almost all areas of mobile technology. Although Microsoft has publicly been promoting the fact that their Windows App Store passed 300,000 applications, both Apple and Google Play Store passed 300,000 applications back in July of 2011.
According to Good Technology‘s semi-annual Mobility Index Report, Apple had 67% of total device activations in Q2 2014 while Android had 32%. Windows Phone barely registered at 1%.
While Microsoft wants to have at the least a 20% global market share, it will not happen with the current Windows Phone. It is 2014 and still Microsoft is having trouble bringing a number of big-time applications to the Microsoft App Store.
It also doesn’t help Windows Phone that they continue to become ridiculously dependent on one phone maker, Nokia. Nokia accounts for more than 90% of all Windows Phone sales. Maybe Microsoft will announce new phone makers. Then again, is there a reason for makers to come running to Microsoft?
As Adrian Kingsley-Hughes wrote at ZDNet:
As far as I can see, the future of Windows Phone is that it will eventually be replaced by Android. In fact – and I don’t make bold predictions lightly – I can’t see a future where Microsoft doesn’t pull the plug on Windows Phone in the next few years and switch to Android. At a time when millions of iOS and Android handsets are being sold every week, Microsoft would need to start shifting tens of millions of handsets every quarter to even twitch the usage share needle. - ZDNet