Microsoft capped an eventful week in the wireless industry when it announced massive layoffs and a dramatic change in its mobile strategy. The company will kill its Android X experiment, which was aimed at delivering Microsoft’s mobile services on Android-based devices manufactured by Nokia, and will also end production of its Asha line of feature phones. Instead, as Gigaom’s Kevin Tofel noted, Microsoft hopes to build on the momentum Windows Phone has achieved in Europe and some emerging markets by churning out low-end handsets running the platform.
Interestingly, Microsoft’s announcement came on the heels of news of a tie-up between Apple and IBM aimed directly at the enterprise. The partnership essentially enables IBM to package iPhones and iPads with its own MobileFirst technology and services and sell the combined offerings primarily to IBM’s existing enterprise customers. It’s a logical move that should pay dividends for both companies: IBM has an enormous presence in the enterprise but doesn’t make smartphones or tablets; Apple has seen enormous success with iPhones and iPads in the consumer segment but has yet to conquer a mobile enterprise market that is still relatively untapped.
Microsoft also has a huge presence in enterprise software for PCs, of course, but thus far it has been unable to extend that dominance to the mobile enterprise. Windows Phone 8.1 is generating solid reviews as an enterprise-worthy mobile OS, and Microsoft has promised to introduce several high-end devices running its platform “very soon.” Smartphone penetration is nearing saturation levels in many mature markets, so I can understand Microsoft’s strategy of focusing on the emerging markets that show so much promise. But Microsoft still has a chance to make inroads to the lucrative mobile enterprise market. It must continue to pursue that market aggressively even as it ramps up production of low-end Lumia handsets.