The time may be near for Microsoft to surrender in mobile

By Evan Blass on Mashable

Opinion

While smartphones are not an extremely new product category anymore, their widespread popularity certainly is. It's only been in the last few years, a wholly recent phenomenon, that the word "phone" became shorthand for "smartphone." It's a bit shocking to realize, though, that not a single platform which was winning the early smartphone wars has held on to prosper in the more mature marketplace — in fact, they're all dead by now.

Think about that: of the three widely used mobile operating systems in the '00s — Palm OS, Windows Mobile, and Symbian — none of them were able to survive into the present day, much less succeed. Yes, Microsoft as a company was able to stay afloat after transitioning from Windows Mobile to Windows Phone (and soon, to plain old Windows), but it has continued losing market share at a steady clip.

Analyst firm IDC just issued its quarterly report measuring platform market share; in the fourth quarter of last year, Windows Phone (utilized by numerous handset manufacturers but only fully embraced by Microsoft itself, since acquiring Nokia's mobile devices unit) claimed just 2.9% of global shipments. iOS, by comparison, with its single OEM and vertically integrated ecosystem, managed to hold 11.7%. That left over 85% of the market for other players, though Google's Android (at 84.4%) was far and away the leader.

An early leader

Getting back to those early platforms, Microsoft really was sitting in the catbird seat for several years: it controlled both the dominant desktop platform in Windows as well as the enterprise and early adopter choice in the mobile space, Windows Mobile. Then, in one fell swoop, Apple came along and leveraged its popular iPod brand into the iPhone, essentially killing all those who came before it.

Palm? Gone. Symbian? Gone. BlackBerry? On life support. That really only leaves Microsoft still standing from those early leaders, but 

even Windows Mobile felt the iPhone pinch, forcing Microsoft to completely scrap it in 2010

even Windows Mobile felt the iPhone pinch, forcing Microsoft to completely scrap it in 2010 for a new platform that attempted to bring consumers the best of the old (expandability & customizability) and the new (vertically integrated app and music stores, capacitive touch).

While WinPho, as it came to be known, has matured into a powerful platform with a tight core of fervent devotees, Microsoft was never able to deliver features as well as Android and Apple. To wit, Android is easier to hack and flash than Windows Phone, including a more customizable appearance, while Apple has done much more with iTunes and the App Store than Microsoft can ever managed with the Windows Phone Marketplace.

Switching gears

As it became clear that Windows Phone — even with top OEM Nokia providing hardware exclusively for the brand — was not making a dent in the flagship class of devices dominated by iPhone and Galaxy, Microsoft made a strategic pivot to move somewhat downmarket, buoyed by the notion that WinPho could perform better on lower-end hardware than Android (and without any competition in the lower and mid-level tiers from Apple at all).

At this point, Redmond's decision to completely abandon Windows Mobile really came back to bite it. While it's true that WinPho is better optimized for less powerful hardware than Android is, the average consumer seems to care more about app selection than overall performance. Since the older Windows Mobile apps wouldn't run on Windows Phone, and since developers are reticent to code for an unproven platform with single-digit market share, the software selection for WinPho has always severely lagged what is available for the competition.

This next question will surely raise the ire of the Windows Phone faithful, I'm asking it academically, without any judgment laid at the feet of the platform. Microsoft seems committed to WinPho through at least another upgrade cycle, wherein handsets will be running essentially the same code as the desktop version of the upcoming Windows 10. But if even this streamlining and empowering of the platform fails to inject the needed interest and sales, does Microsoft have to consider sunsetting the product line?

An uncertain future

Historically, the company has never been afraid to throw money at a project until it's able to stand on its own; Bing is a good example of this. But MSFT also has a history of pulling out of a category when gaining any more traction seems impossible, as was the case in digital music (Zune) and even its brief foray into feature phones (Kin). How bad would things have to get before Windows (Phone) eventually was seen as too large of a liability?

Just a couple of weeks ago, Microsoft announced it would be closing down two Chinese factories that it picked up from Nokia, and with their shuttering will come the termination of some 9,000 employees. The move follows two even larger rounds of layoffs directed at Nokia employees that it inherited in the purchase; it seems safe to say that whatever remains of Nokia's devices division is running at just a small fraction of its former capacity (when its success came thanks to products running yet another one of those early platforms, Symbian).

I'm not sure what the landscape would have to look like for Microsoft to completely turn its back on mobile, but at some point the development and maintenance of the platform (even when it's more or less a repackaged version of desktop Windows) could conceivably get too expensive to justify devoting any resources to it at all. But that would be a drastic move, indeed, and there would likely be a devastating blow to the stock were the company ever to give up hope on such an important market.

Cheering the underdog?

There are clearly a lot of people rooting for WinPho, as I've noticed in comment sections, forum postings, and chatter among colleagues. But many of those same people are also frustrated at the direction they've seen Redmond take since the 2010 reboot; to some observers, they not only ruined a good thing when they sacrificed Windows Mobile, but they destroyed Nokia in the process as well (with former and current Microsoft executive Stephen Elop playing the role of Trojan Horse in some versions of this narrative).

Regardless of what ends up happening, it has turned into one of the most interesting storylines to observe in the smartphone era: The last man standing from the birth of the category struggling to remain relevant — at a time when relevance in this particular vertical is more crucial than ever.