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Monday Note’s Jean-Louis Gassée writes about the death of Windows Phone:

How could Microsoft’s Windows Phone licensing business model stand a chance against Google’s Free and Open Android? None of the Redmond giant’s complicated countermeasures worked, its smartphone platform is dead. And yet, inexplicably, Microsoft failed to use a very simple move…

Source: Fiction: Who Killed Windows Phone? – Monday Note

For a long time Windows Phone was a better phone operating system than Android. By better, I mean it was easier to use, understand and navigate than Google’s phone operating system.

It was also better because it provided essential information in a straightforward way. You could glance at your phone and see the important things straight away.

A better phone OS

Windows Phone was better because it integrated well with Windows on desktop and laptop computers. It was also better in that it played nicely with Microsoft Office. If you were wedded to Windows and Office, you could get huge productivity gains choosing a Windows handset over an Android.

Today’s Android phones have improved on all these things. Yet at the time Windows Phone was first introduced, it was streets ahead.

I know this better than anyone. I used Windows Phone everyday for the best part of two years. For me, at the start of that time, the advantages outweighed the negatives. Before the two years were up, the balance tipped the other way.

From a user point of view, Windows Phone lost its charm because third-party software developers ignored it. At best they neglected it. If any third-party developer did create an app, they failed to upgrade it as fast as their Android or iOS versions. But many apps, including important ones, never made it to Windows Phone in the first place.

Never mind that many of those apps were worthless one-trick ponies. There was a lack of choice, there was a feeling Windows Phone was becoming a forgotten backwater.

In his post, Gassée takes his time getting to the nub of how Windows Phone became a backwater. He writes:

Microsoft made a number of bad decisions that stem from its hardened culture…

For a long time, Microsoft’s orthodoxy placed the PC at the center of the world. When smartphones took center stage, the company’s propaganda censured talk of a Post-PC world. Smartphones and tablets were mere “companion devices”.

The simple move mentioned at the top of this story was making the operating system free to phone makers. That’s what Google did with Android.

Momentum

Gassée argues that Microsoft’s culture meant it didn’t think to make its phone operating system free until it was far too late. That’s true. By missing that boat, Microsoft’s phone OS never gathered enough momentum to attract third-party app developers. Meanwhile the Android and iOS app stores were filling with every imaginable phone application.

Which is odd, because know how to attract developers was a Microsoft strength with MS-Dos and Windows as it was building an empire.

From there it all went downhill fast.

Could Windows Phone return from the dead? Probably not. Apart from anything else, Microsoft has moved its focus to more lucrative markets like cloud computing.

Blackberry Priv

BlackBerry‘s Android model, the Priv, failed to revive the company’s phone sales. According to Juniper Research, BlackBerry only sold 734,000 phones in the last quarter of 2015 — a total of 3.7 million for the full year.

If anyone is interested, the phone went on sale in Australia today.

Microsoft‘s Windows phone fared little better than BlackBerry with just 4.5 million sold during 2015. Market share dropped 57 percent. If there was a new Microsoft phone launched during the year, no-one told us about it in New Zealand.

BlackBerry and Microsoft are just two victims of a wider malaise. Worldwide phone sales have stalled, if not peaked. The total number of phones sold in 2015 from all brands was 1.4 billion and, for now, no-one is predicting more than a percent or two increase in sales for 2016.

Samsung still sells more phones that any other company. It saw a one percent increase in 2015 to a total of 317 million sales. Even evergreen Apple warned of slowing sales.

Elsewhere it’s a bloodbath. Sony and HTC both saw huge drops of 36 percent year-on-year despite interesting new launches.

A number of readers have commented that moving to Android would save BlackBerry or Microsoft’s phone business. It was never going to happen. Even the companies that have stuck to Android for years struggle to earn money from making phones.

A better strategy for Microsoft and BlackBerry would be to focus on phone software, both have key apps that large companies — read that as deep pockets — need.

Update: Original story said LG sales were down 36 percent instead of HTC.

Analyst firm IDC says Microsoft’s Windows Phone is going nowhere.

According to the latest IDC Worldwide Quarterly Mobile Phone tracker, Microsoft’s mobile OS has just 2.2 percent market share. That in 2015. By 2019 it will add another 0.1 percent giving it a total 2.3 percent of the mobile market.

IDC says despite all the work Microsoft is putting into the phones it doesn’t expect the company to sell many more.

Nothing Microsoft does changes this

Even the company’s push into the phone market low-end isn’t helping. Windows Phone’s average selling price is just US$148. That’s way below Apple’s average of US$687. It’s about two-thirds of the $219 Android phones get on average.

We already knew the phones were a problem. Earlier this year Microsoft wrote off US$7.5 billion of the US$9 billion it paid to buy Nokia.

By then Nokia was the only significant Windows Phone device maker. Part of the original deal include cash, so the write down valued the Nokia business at next to nothing.

Technical triumph, sales disaster

In technical terms Windows Phone 8 was a triumph. It brought a crisp, clear interface at a time Android was a disorderly mess. Windows phones are easier for non-geeks to use and understand than Android devices. Users swear they are more productive. This squares with my experience.

The plumbing is good and Windows Phone integrates social media services like Facebook and Twitter. It also played well with the rest of Microsoft’s world.

For a time, a Windows Phone coupled with a Windows computer was a powerful combination.

Windows Phone superior, not popular

Like Sony’s Betamax video tape standard Windows Phone offered superior technology. But like Betamax it was defeated by externalities.

Although there were many great third-party Windows Phone apps, it could not match Android or iOS. Developers prefer to invest time farming more lucrative pastures.

Many of the blockbuster apps never made it to Windows Phone. Or if they did, they would turn up in a non-standard form.

Count the apps

Microsoft had great versions of its key apps, including Office. Yet it bowed to the inevitable creating Android and iOS versions.

The Betamax moment passed in a blink of an eye. Within 18 months of offering a bright new alternative phone OS, Windows Phone 8 was roadkill on the information superhighway.

My analogy breaks down at this point. Sony’s tape standard went on being better than VHS for over a decade. You just couldn’t watch many movies on it.

Slow to evolve

Hardware stays the same for a long time, software changes rapidly. Android and iOS moved on. Windows Phone has been slower to evolve.

When I last looked at Windows Phone it had gone from being at least the equal of Android and iOS to a generation or more behind. At least in terms of usability and suitability to task.

IDC says by 2019 Android will have 82.6 percent market share and Apple will be at 14.1 percent. Comparisons between those two operating systems is nothing like VHS and Betamax.

Steven Elop Nokia Microsoft lumia phones

Things got crazy towards the end of Steve Ballmer’s time as Microsoft CEO. One of his dumbest moves was buying Nokia.

Some say the decision cost him his job. That wasn’t all. Last month the software giant wrote down US$7.6 billion it spent buying Nokia.

Until the acquisition, Google, Facebook, Amazon and, most of all, Apple dominated technology news reports and discussion.

Microsoft relevant

They still do. Yet Microsoft is relevant again. In a way the Nokia episode helped the company get back on track, in part by being the catalyst for a much-needed change of leadership. It also helped the company’s top brass focus on where the business is and where it can go.

From the sidelines Ballmer saw Apple win revenue, margin and respect while Microsoft appeared to drift towards irrelevance[1].

His last roll of the dice was an ill-judged attempt to remake the business in Apple’s image. Hence the talk of “software and devices”.

In itself that was not a stupid strategy. But it ignored Microsoft’s strengths and weaknesses.

Great phones, late to market

Buying Nokia was meant to catapult Microsoft into the phone market. The company’s phones are great. In many respects the Windows Phone operating system is better than Android[2]. I used one for a couple of years, but they were too late.

It then bet on phone and tablet-like touch screens being dominant. It went too far too fast.

Instead of a steady-as-she-goes update to Windows 7[3] Microsoft went in boots and all with tablet-like touch screen technology for Windows 8.

Microsoft disrupted

Microsoft intended the move to be disruptive. In the event it was disrupted.

Buying Nokia was a disaster. Many of the 25,000 employees at the phone maker have lost their jobs. There are empty factories and ghost towns in Nokia’s native Finland.

It didn’t go any better for Microsoft. Almost every dollar it spent has gone down the gurgler.

However, Microsoft was big enough to weather that storm. A new boss, a new direction and a new confidence mean any lasting damage is now safely behind the company.

Destroying value

Microsoft should have known better. Large scale technology company mergers seldom deliver the promised gains. Most destroy value. There are as much about ego or distracting attention with big gestures as about creating fresh opportunities. Savvy investors run a mile when they hear the term synergy.

Microsoft’s Nokia acquisition is the latest in a long string of large-scale technology deals that failed to deliver on promised benefits. Think Oracle and Sun Microsystems.

This year Microsoft wrote down US$7.6 billion on the deal. In effect that means the Nokia mobile phone business is now worthless, a decade ago dominated the market. Blame the iPhone.


  1. There was some truth in this, but CEO Satya Nadella has Microsoft back on the Cluetrain.  ↩
  2. Lots of users are unhappy about the holes in the Windows Phone app store. Too many “must haves” are either not there, woefully out-of-date or poorly supported.  ↩
  3. Windows 7 was itself a rescue job after the horror of Windows Vista. There’s a lot of truth in the idea that every second version of Windows is a clunker.  ↩

Satya Nadella Microsoft CEO

It’s one year since Microsoft appointed Satya Nadella as its third CEO. He was clearly the right person for the job.

Things are not perfect at Microsoft, but Nadella has done a great job of reinventing the company and making it relevant again.

Some of his achievements:

  • Made Microsoft a player in the booming iOS app market with first class versions of key Office apps.
  • The Office apps were in the pipeline, but stalled, when Nadella took over. However, it was under his leadership Microsoft acquired Accompli then raced to get a terrific version of Outlook for iOS out to market.
  • For a long time Microsoft was openly hostile to Apple. Former CEO Steve Ballmer spoke contemptuously of iPhones and iPads. Nadella stopped the cold war, even choosing to use Apple kit to display Microsoft products to audiences. He has a clear understanding of symbolism.
  • Likewise Microsoft has built bridges to the Android world. There are Android apps and new Microsoft tools for building apps on Windows, Apple or Android devices.
  • Microsoft is investing in Cyanogen to build a new, non-Google, fork of Android.
  • There have been a swag of new products including Sway and Delve. Also the Skype translator.
  • Revitalised Windows which badly lost direction and momentum under Ballmer with Windows 8. Windows 10 looks to change that. Apart from anything else, it’s one OS, one code base, that will run on any device from tiny to huge.
  •  Made Windows free for devices with screens smaller than nine inches. That’s going to change the dynamics of the market for low-end tablets and small computers.

Underlying this is a new confidence in Microsoft from investors. The company is worth 20 percent more today than when Steve Ballmer announced his departure.

It’s not all rosy. Microsoft has a problem with smartphones, the otherwise excellent Windows Phone OS has failed to get much traction in the market. At the moment, the Nokia acquisition looks more like a millstone around the company’s neck than an asset. Nadella will need to conjure something magical to cure that problem.