Windows Phone is Irrelevant Today, But It Still Has a Future

Posted on April 18, 2016 by Paul Thurrott in Windows Phones with 0

Windows Phone is Irrelevant Today, But It Still Has a Future

I spend an inordinate amount of time fretting about Windows phone’s slow motion death spiral. But I’m increasingly convinced that the future of this platform is tied to the success of Windows 10, and that these “phones,” as we now call them, simply become very small Windows 10 Mobile PCs.

OK, I’m making lemonade here, but bear with me: There is something very attractive about Windows phone—a platform I love dearly—adapting to the ever-changing personal technology landscape and emerging on the other side as a smaller but viable and sustainable business.

It won’t be the same, I know. But with Windows 10—run, by the way, by the same people who previously ran the smaller Windows phone business—Microsoft is finally engaging in the platform cross-pollination that should have happened 6 years ago when Windows 8 was originally conceived. That is, when you look at a consolidated “One Windows” platform, it has the best aspects of all the constituent parts. And Windows phone’s legacy plays a big role in defining what that is.

Today, of course, Windows phone is irrelevant. It’s irrelevant statistically, with less than 2 percent market share. It’s irrelevant to the market success of Windows 10, since the vast majority of installs so far are on traditional PCs and 2-in-1s. And it’s irrelevant day-to-day since anyone with actual needs cannot abide a smart phone that has no real-world apps.

Windows phone market share, visually. (Thanks to Seattle Times)

Windows phone market share, visually. (Thanks to Seattle Times)

But irrelevant isn’t the same as dead. I’ve argued in the past that Windows phone is more “zombie” than dead because it is “the walking dead,” e.g. a platform that is being kept in the market only artificially, and with vastly reduced resources, so that Microsoft can figure out what to do next.

I’ve also argued in the past that Microsoft has a short-term “fix” for Windows phone: Continuum functionality via docks, wireless, or cables, so customers can use their phones as (sort of) real PCs when they sit at their office desk.

Continuum doesn’t solve the central problem with Windows phone … when used as a phone: It doesn’t magically erase the app gap, just as Surface phone won’t likewise fix this same issue. But it does reposition Windows phone as just another Windows 10 device, one sitting alongside the diverse range of other device types Windows 10 ecosystem, like IoT devices, tablets, PCs, Xbox One, Surface Hub, and HoloLens. It’s something that could be a mini-PC … that could also be used to make phone calls and send text messages. (Just like your normal PC will be able to, with the Anniversary Update.)

Analyzing the future is difficult, but I’m always looking for signs from Microsoft that point to possible strategies. Sometimes they’re explicitly stated, like last July’s $8 billion comeuppance, and sometimes they’re implicit, like earlier this month when Microsoft all but ignored Windows phone at its own Build conference.

So consider these recent words from Microsoft CEO Satya Nadella, which happened when he was asked about Windows phone.

“Three years ago most people would have said, ‘What is a two-in-one?’ And now even Apple has a two-in-one. And so three years from now, I hope that people will look and say, ‘Oh wow, that’s right, this is a phone that can also be a PC.’

“As emerging markets grow they will also want computers that grow from their phone. What’s the most logical thing? I would claim it’s a Continuum phone, which means that it can have other forms of input beyond touch.”

Ignoring for a moment that the “most logical thing” is quite obviously not a phone without a viable app ecosystem, Mr. Nadella said something very powerful there.

Three years from now.

He said three years from now. When asked why Microsoft has and continues to develop its mobile platform, Nadella looked ahead three years.

This suggests that he has a plan to keep Windows phone in the market for at least that long, no matter how badly it continues to perform. Indeed, part of last July’s strategy shift guarantees that Windows phone will only continue to sink, but as I noted at the time, that’s the plan: Microsoft loses money every time it sells a Lumia phone.

So anything could change, of course. Windows phone could tank hard enough that this July, or next July—Microsoft’s fiscal year ends at the end of June—the firm could finally throw in the towel. The flipside is not happening: I don’t see any scenario where Windows phone ever gains share in the smart phone market.

But it is possible that the future of this product line is not the phone market. That Windows phone, generally, like the HP Elite x3specifically, will be sold as a special kind of PC, and not as phone. That this thing is just Windows 10 Mobile, not Windows phone. That it is just a kind of Windows 10 for smaller devices. (This lends credence to the possibility of Microsoft actually making Surface phone, as well.)

Becoming a piece of the PC market—which is about one-fifth the size of the smart phone market and is shrinking—is not a recipe for resurgence. This isn’t a pipe dream where Windows phone rises from the ashes, Phoenix-like, and smashes its foes. Instead, this is a more pragmatic future, one in which Windows 10 flourishes as a platform because of its device diversity. And phones are just (a small) part of that.

No, it’s not a dominant future. But it’s not a bad future. More to the point, it’s a future.

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