Windows Phone: The Morning After

Posted on May 25, 2016 by Paul Thurrott in Windows Phones with 0 Comments

Windows Phone: The Morning After

I’m trying to put this week’s Windows phone news in perspective, but there really isn’t that much to say. Last July, Microsoft effectively exited the smart phone market, but now they’re just … exiting the smart phone market a bit more.

Not much of a story, is it?

Tech blogging/reporting being what it is, some will of course still sensationalize this event to drive page views. But here’s what’s really happening.

Microsoft is formally abandoning the consumer and value phone markets. As I noted in Microsoft to Further Streamline Its Windows Phone Business, the big strategy shift here is that Microsoft is giving up on the consumer and value phone markets and will focus only on the business market. (Irony alert: The business market is what Microsoft ignored completely when it first launched Windows Phone in 2010.)

Virtually all of the Nokia employees who came to Microsoft in 2014 will be laid off by the end of the year. After three major rounds of layoffs, virtually every single former Nokia employee still at Microsoft will be gone by the time this year concludes. This year’s 1850 layoffs represent the smallest number of job cuts so far, but that is of no solace to the poor ex-Nokians who stuck it out with Microsoft.

Microsoft has lost far more than $7.5 billion on the Nokia acquisition. I’ve seen a number of reports note that Microsoft has pretty much lost its entire $7.5 billion investment in the acquisition of Nokia’s mobile and services businesses. Actually, the losses are much higher than that, and exceed $10 billion that we know about. I bet it’s much higher than even that figure.

And … that’s about it. Only the first of those three items really impacts Windows phone as a platform, so there’s a lot less to analyze than was the case last year. Also, I think it’s fair to say that a year of hard truths has finally convinced most Windows phone fans to be more realistic. Yes, there are still delusional types who look glassy-eyed to some future resurgence. But for the most part, the fan base seems to be coming around to the truth.

Which is this.

Windows phone as a market is irrelevant. Today, Windows phones account for well under 1 percent of all smart phones sold worldwide, and this platform lacks the apps and ecosystem support to matter with mainstream customers. That said…

Microsoft will continue developing Windows 10 Mobile. Many are commingling “Windows phone,” “Lumia,” and “Windows 10 Mobile” here. But these are separate things. Microsoft will continue to develop and improve Windows 10 Mobile because it is just a SKU (product version) of Windows 10, and because it can run on the ARM hardware that is at the center of the mobile devices market.

New Microsoft hardware is coming … eventually. The question is whether it will bear a Lumia brand—I do not believe so—or whether it will be Surface-branded. And in either case whether there will be another traditional smart phone or some kind of new device.

Microsoft will focus its own Windows phone efforts on the business market only, but that doesn’t mean others can’t step in. I’ve seen some commentary around the consumer retreat, but that doesn’t mean that a company which can actually market to consumers couldn’t still try and ship consumer-focused Windows phones. It would be a futile effort, in my opinion, but let’s face it: Microsoft just can’t market to consumers.

Relax, you can keep using Windows phone. I get a lot of weird commentary from people who believe that I am trying to convince them not to use Windows phone. That is not the case. What I’m trying to convince them is to stop proselytizing the platform as if it makes sense generally or is something one might recommend to others. If you know what you are getting into, go nuts. But stop pretending that Windows phone solves problems that iPhone and Android do not. These other platforms are vastly superior to Windows phone now. Sorry.

Put even more simply, from the perspective of the Windows phone enthusiast, nothing has really changed: Microsoft will continue to artificially prop up the platform you love, and you can continue using the devices and maybe even buy new devices in the future. For the rest of the world—and seriously, this is like 99.9 percent of the population now, unfortunately—you can safely continue to ignore Windows phone. As you have always done.

 

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