Make-or-break time for Microsoft's Windows phone?
Microsoft (MSFT) will make its big stand in the smartphone market later this year, according to the Wall Street Journal. A new flagship device running the upcoming Windows 10 will let developers write universal apps that not only run on phones but any other Windows-based device, including desktops and laptops, without reprogramming to adjust to different screen sizes and system capabilities.
The goal is ambitious and could, in theory, provide developers with a vast potential market. The opportunity, so Microsoft hopes, could attract developers to embrace Windows on phones and result in a new wave of applications that could make the platform enticing to consumers. But it's unclear whether Microsoft has a reasonable chance of pulling out of the mobile tailspin it has been in for years.
Many years ago, Microsoft was a force in mobile phones with a hefty double-digit market share. No longer. Its fortunes have diminished as other companies -- Apple (AAPL) with the iPhone and Google (GOOG) with Android -- redefined what a phone could be.
Even as Microsoft tried time and again during the last few years to create something to restore some of its luster, it failed miserably. The company's market share has gone from bad to worse. According to IDC, a 3.3 percent market share in 2013 declined to 2.7 percent in 2014. A volume of 34.9 million units last year was dwarfed by 192.7 million iPhones and an estimated nearly 1.1 billion Android handsets.
Buying the mobile device business from Nokia has done nothing to improve the situation yet. Neither have refinements of the user interface. One of the standard rationales has been that third-party developers never warmed to the relatively small sales and therefore didn't release the apps that might have prompted more consumers to purchase the units.
Even with the ability to reach a wider audience, there's the question of whether developers will devote the necessary resources to expand the number of platforms they currently support or wait to see some significant change in sales. If the latter, don't expect a sudden improvement.
As for a new flagship phone, Microsoft has tried that tactic with the Surface tablet and has seen some success, with an estimated 1 million units shipping in the last quarter of 2014, with a continued net financial loss on the project. However, there's the question of whether Surface has partly cannibalized laptop sales that would have occurred, rather than supplement them. The entire tablet market has been slowing, suggesting that trying to anticipate what consumers will want in the long run is more difficult than the electronics industry likes to think.
Reversing the trend of falling Windows-based phone sales will be an enormous challenge. If Microsoft can't manage the task this year, will it ever? Or is the window of opportunity quickly closing?