Windows Phone is heading back to death's door

Microsoft's focus on the low end is likely to make matters worse, argues analyst Jan Dawson

Microsoft Windows
Reuters/Dado Ruvic

After BlackBerry's market share collapsed a couple years ago, Microsoft's struggling Windows Phone became the new hope for people who didn't want to see the mobile world split between only Apple's iOS and Google's Android. Windows Phone's market share began to rise, hitting 3.4 percent a year ago, up from 2.1 percent a year before.

Though a tiny portion, at least the movement was in the right direction. But in the last six months, Windows Phone's market share has been declining and is now at 2.8 percent, according to IDC market data.

The first three Windows Phone versions were pathetically backward compared to iOS and Android, but Windows Phone 8.1 — whose release began this summer in a series of fits and starts based on carriers' and device makers' whims — started to make Windows Phone a credible platform. However, buyers don't seem impressed. Maybe they've given up on Windows Phone after four years of ineptitude; maybe they're waiting for next year's Windows 10, which Microsoft says this time — we promise! — will be really good (as it always does).

Whatever the reason — and despite Microsoft making the Windows Phone OS free for smartphone makers last winter, to boost adoption — Windows Phone's market share is shrinking.

But Windows Phone's issues aren't merely the state of the mobile OS. Jan Dawson, principal analyst at Jackdaw Research, has analyzed Windows Phone and in a report released today has concluded that the platform is unlikely to rebound. Dawson is not a partisan of any platform, so his conclusions carry serious weight.

Windows Phone is in a downward spiral — without a strong underlying operating system, developers can't create compelling apps. Without a reasonable market share, developers won't create reasonable apps, even if the OS supports them. Without a compelling device, OS, and app combination, users won't buy Windows Phone in any significant quantities, so developers have no incentive.

Shortly after iOS first came out, Apple quickly created several flagship apps such as the iWork suite, iMovie, and iPhoto to showcase the power of the then-new platform. Early in its history, buyers and developers could see why a gamble made sense. A couple years later, Apple brought enterprise-class security to iOS, and soon iPhones and iPads became the new mobile corporate standard.

Google didn't take the rich-app-and-security approach with Android, which struggled for its first few years, relying on the fact it was free and open to any hardware manufacturer to gain market adoption. After a few years, it hit that magic momentum outside the enterprise and became the default personal smartphone platform for most buyers. Although its app portfolio and security capabilities continue to lag those of iOS, it managed to be the good-enough platform for the vast majority of folks who didn't want a pocket computer like the iPhone, merely a flexible messaging device that could play games, surf the Web, and perform simple but useful activities.

With those two platforms now deeply ensconced in the market, there's little room for Windows Phone, Dawson argues. Here's what he sees:

Part of the reason [for Windows Phone's tiny market share] is the ongoing "app gap" versus Android and iOS, which is reflected not just in quantity but quality of apps. ...

Windows Phone is becoming increasingly a low-end operating system, which means it neither has the scale of Android nor the premium focus of iOS, which significantly limits its developer appeal.

Dawson notes that Microsoft is trying to make Windows Phone compelling, but he's not hopeful about those initiatives: "Most of these are unlikely to have an impact." He's particularly concerned about Microsoft's strong focus on growing the low end, where buyers spend little money on apps, leading to an unattractive app portfolio that in turn sends buyers who would spend money back to iOS — and with them go the leading developers.

The strong version of Microsoft Office now available for iOS and soon coming to Android means even Microsoft-centric customers would have no real incentive to use Windows Phones, Dawson says. I've complained for years about the horrible Office app that Microsoft has foisted on Windows Phone customers, which only underlined that Microsoft was not serious about mobile.

Microsoft promises that a real Office will come for Windows Phone 10, but it's already here for iOS and will be here for Android before it shows up for Windows Phone. Office will not be an advantage for Windows Phone as it could have been several years ago.

What is Dawson's prescription for Microsoft? He urges the following actions:

  • Create a compelling single flagship device for the platform and investing in significant marketing and wide carrier distribution.
  • Establish clearer differentiators for Windows Phone as a platform, especially at the high end.
  • Do more to help developers create apps for Windows Phone, especially going beyond the up-front development of a new app.

It's easier said than done, of course.

At this point, Dawson advises, "Developers should only invest significant resources in Windows Phone if they are serving a specific niche, local geographic markets where Windows Phone is a significant presence, or there is specific demand from end users." That's not going to help broaden Windows Phone's appeal, but it may at least root Windows Phone in a few niches from which it can try to grow — similar to what BlackBerry is trying to do.

The truth is that the world does not need Windows Phone. Microsoft needs to figure out how to make us want it, and to do that it has to stop assuming people will buy it simply because it's called Windows. That strategy has clearly not worked.

Copyright © 2014 IDG Communications, Inc.