Microsoft will succeed in mobile despite itself

The boo-birds have cranked up their condemnation of Windows Phone in the last week following Microsoft’s announcement that it will acquire Nokia for $7.17 billion. PCWorld summed up the deal as “fail plus fail equals more fail.” Analyst Benedict Evans wrote that the deal changes nothing — Windows Phone is failing, according to Evans, because of its circular problem of not having enough apps to entice many consumers who would in turn convince developers to build Windows Phone apps. (Evans followed that post up today with this piece urging Microsoft to “move from denial to acceptance and work out what comes next.”) And Ben Thompson of Stratechery.com said Microsoft should have abandoned its mobile operating system rather than acquire Nokia, opining that “The war is over, and iOS and Android won.”

There’s no question that Windows Phone has fallen far short of expectations since its debut in October 2010, forcing some analyst firms to revise sky-high forecasts for the platform. It has struggled to attract the attention of developers, as Evans noted, leaving Windows Phone Store without some popular titles found in Apple’s App Store and Google Play. And – in another circular problem — manufacturers have yet to come up with a hit device running Microsoft’s mobile OS.

Showing signs of life

Interestingly, the latest round of catcalls comes just as Windows Phone appears to be gaining its footing. As Facebook’s James Yu told developers at last week’s Parse Developer Day in San Francisco, Windows Phone is the fastest-growing mobile platform in the world – an assertion that was backed up last week with an IDC report that found the OS has grown 77.6 percent worldwide in the last year. While Windows Phone claims a modest 3.9 percent of the worldwide smartphone market, it has cemented itself in third place behind the two dominant platforms and is clearly gaining momentum.

That growth – overdue as it is – helps explain why Microsoft is slowly addressing the app gap as well. Windows Phone now supports more than 170,000 apps in nearly 200 geographical markets, and major developers and publishers who already have Android and iOS titles – which is to say, nearly all of them – now have a clear-cut third platform to address. Windows Phone Store is still small enough, though, to give developers a decent chance to catch the eyeballs of consumers compared to the massive warehouses managed by Apple and Google.

And the market certainly appears to provide fertile ground for a third major mobile operating system. The iPhone’s limited smartphone lineup and tightly controlled ecosystem make it highly unlikely that Apple will ever reclaim its status as the world’s top smartphone vendor even with the launch of a more affordable handset. Android continues to build on its astounding momentum worldwide, but Kantar Worldpanel reported last week that Google’s mobile OS has seen its share of new smartphone purchases in the U.S. drop over the last year. And the struggle to reclaim relevance continues for BlackBerry, which once owned the mobile enterprise market Microsoft may still lay claim to.

Stumbling into success

There’s no question that Microsoft has made serious mistakes at nearly every turn since the launch of Windows Phone. The company ill-advisedly targeted the niche gaming set out of the gate rather than appealing to the mainstream users and business types that have long been its bread and butter on PCs. It has failed to forge the carrier alliances that can be tremendously powerful in selling smartphones, and as my colleague Kevin Tofel recently pointed out Microsoft is unlikely to license to license Windows Phone following its acquisition of Nokia. And it clearly hasn’t done enough to build the developer community that was necessary to fuel the growth of its platform in its first three years.

But as anybody who has used it can tell you, Windows Phone is a powerful, intuitive operating system that unquestionably rivals Android and iOS, and Microsoft clearly has the will and the deep pockets to steamroll its way back into the game. It’s too early to predict whether the Nokia acquisition was a good move, and I certainly don’t expect Redmond to begin executing well in mobile considering the company’s track record. But the mobile OS war is far from over, and Microsoft is still likely to succeed despite itself.

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Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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2 Comments Subscribers to comment

  1. Interesting and thought provoking. Nokia brings incremental revenue of nearly $40B – but it is falling and unprofitable revenue stream.

    I do agree that MSFT has a lot of assets and technology to bring. And their entry into Mobile is essential long term. and yes, they will gain some measure of success.

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    1. Thanks for your comments, Fred. Always good to hear from you.

      I probably should have been a bit bolder about my thoughts regarding Microsoft’s long-term prospects in mobile, so I’ll take the opportunity to do that now: I think the company stands a very good chance of emerging as the third major mobile operating system over the next 18 to 24 months, and I think it’s likely to become a serious threat to the big two.

      Thanks again,
      cg

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