Windows Phone Grew Unit Sales in 2014, Lost Market Share

IDC this week is reporting that Android and iPhone combined to control 96.3 percent of the smart phone market in 2014, a stunning one-two punch that left little room for Windows Phone. Yes, Microsoft’s smart phone platform handily out-performed BlackBerry, Firefox, Sailfish and the rest, but it is at best now an also-ran in smart phones.

Long-time readers know that I generally try to combine results from both IDC and Gartner when it comes to discussing PC or device market share. But I felt this news was too important to wait on Gartner, so I’m going to go with just IDC’s figures because I don’t believe the additional data will provide a rosier picture.

According to IDC, Android’s share of the smart phone market grew in 2014, with device makers shipping over 1 billion Android smart phones, good for 81.5 percent of the market. In 2013, device makers shipped 802.2 million Android smart phones, capturing 78.7 percent of the market.

Apple’s iPhone also grew its unit sales, but the platform once again lost market share because Android grew faster. Apple sold 192.7 million iPhones in 2014, less than one-fifth the number of Android phones, and enough for 14.8 percent of the market. But while this figure was an improvement over the 153.4 million units it sold in 2013—largely because of the blockbuster success of iPhone 6 in Q4—Apple’s share of the smart phone market actually fell slightly in 2014 from the 15.1 percent it controlled in 2013.

As an aside on iPhone, you may be interested in how well iPhone 6 performed in that fourth quarter: IDC says that iPhone captured almost 20 percent of the market in that quarter, compared to 76.6 percent for Android. So that’s a nice little bump, but it didn’t appear to damage Android much. That is, it was just a little bump, and if history is a guide, Apple’s market share will revert to its previous trajectory. We’ll see.

Windows Phone unit sales hit a record 34.9 million units in 2014, IDC says, but that is less than one-fifth the number of iPhones sold in the same time period. Worse, Windows Phone’s market share fell to 2.7 percent in 2014, down from 4.2 percent the previous year. And growth was tepid at best: Windows Phone unit sales in 2013 were 33.5 million units.

Blackberry disappeared in 2014, selling just 5.8 million units—just one-sixth as many as Windows Phone—a drop of 70 percent (!) from the 19.2 million units it sold a year ago. With just .4 percent of the market, Blackberry is no longer part of the conversation.

There are a couple of interesting tidbits in this report, especially for Windows Phone fans.

First, while the 1 billion mark is a major milestone for Android, consider this: Android smart phone sales in 2014 were greater than all smart phone sales combined in 2013.

While Apple had a huge fourth quarter thanks to iPhone 6, IDC doubts that it can continue this momentum. The issue is “how Apple will sustain demand going forward, as larger screens were among the last gaps in its product portfolio.”

IDC now questions the validity of a third smart phone ecosystem, which you may recall was Stephen Elop’s goal when he took over Nokia and adopted Windows Phone. Yes, Windows Phone “edged out BlackBerry, Firefox, Sailfish and the rest,” but none of these platforms “made the kind of gains needed to challenge” Android or iPhone. “This isn’t to say that vendors aren’t making moves, especially for the … low-end markets,” IDC’s Melissa Chau wrote. “With Microsoft bringing ever-cheaper Lumia into play … there is still a hunger to chip away at Android’s dominance.”

Windows Phone experienced the lowest year-over-year growth of the leading smart phone platforms, “well below the overall market.” Noting Microsoft’s focus on the low-end last year, IDC says that “Windows Phone stands to make a more concerted effort to return to the high end of the market with the launch of Windows 10 later this year.”

So. Is this game over for Windows Phone?

I can see why many would think so. Certainly, one could make the argument that Windows 10 is a last ditch effort to save Windows Phone, but that there’s nothing on the horizon to suggest that Microsoft can reverse its ongoing market share slide. On the flipside, Microsoft’s universal app strategy is a good one, and while phone by itself may never amount to much, the broader Windows platform is arguably a lot more important. I guess we’ll see. But my worry about the other part of the strategy—low-end devices—is that Android can and will run away with that. And it’s not like selling low-end phones helped Microsoft in 2014.