Windows Phone and the 2.6% Factor

January 23rd, 2013

Amid reports that the iPhone garnered some 51.2% of smartphone sales in the U.S. during the last quarter, at least according to one survey, you wonder how Microsoft’s costly Windows Phone initiative is going. The answer, it seems, is not very far.

The survey, from Kantar Worldpanel ComTech USA’s consumer panel, is based on 250,000 interviews, and focuses on sales, not market share. What this indicates is that, in this country at least, the iPhone continues to grow at a decent pace, whereas Android is flat or dipping. At the same time, the best Windows Phone could do was 2.6%, even after all those noisy TV ads from Microsoft and AT&T. This is not good.

Overseas, it appears Windows Phone might be growing faster, but the OS remains in the low single digits. This is far less than the sea change for which Microsoft has been hoping. It’s not quite a rounding error, to paraphrase what Microsoft CEO Steve Ballmer once said about the Mac, but it’s hardly encouraging. Unless the platform suddenly soars, it would take years to gain a meaningful market share at the current growth rate, and by then the market will have moved on in a different direction.

For Microsoft, the hits keep on coming. Windows 8 didn’t generate a sudden upsurge in PC sales during the holiday quarter, though I suppose it may have helped reduce the erosion some. But with unfavorable reviews even from journalists who supposedly were inclined to favor Windows, Microsoft has a lot to worry about. Besides, the presence of Windows 8 hasn’t sparked a flurry of innovation from PC makers. Samsung has passed on building a Windows 8 RT tablet, so the Surface may have most of that tiny market for itself. Those convertible PC note-books that attempt to morph from laptop to tablet with a swivel or a twist aren’t getting loads of sales. The only Ultrabook-style note-book to do well is evidently the one that inspired Intel to develop that platform, the MacBook Air.

I guess Windows users are too accustomed to paying $500 for note-books, and thus are disinclined to consider anything more expensive, unless, of course, it’s made by Apple.

But this is not to say that Windows Phone is bad. I suppose the screen can get busy if several tiles are rapidly updating information, but the purpose is to let you quickly see the information you want and get on with your business. Windows Phone is less suited, it seems, for people who actually want to spend a fair amount of time using their smartphones, although the interface seems to get good marks from customers. Only there aren’t enough customers. Most prefer the iOS or Android.

Being different can be a good thing, as any Apple fan knows full well. But being different can also mean being confusing, or disruptive in the wrong way. So Windows Phone is very different from the majority platforms from Apple and Google, and the public is not impressed. Windows 8 is very different from Windows 7 and, again, the public is not impressed.

With Windows Phone, it seems doubtful that Microsoft will just throw out the interface and provide something that more closely resembles the iOS and Android. Sure, they made billions emulating a certain OS with Windows, but what have they done lately?

With Windows 8, the changes could have been positive, with better support for touchscreens and a way to simplify a very confusing environment. But some of the changes strike me as childish, rather than sophisticated and elegant. That was the wrong way to go, and this puts Microsoft in a peculiar position.

Sure, I suppose they could stay the course with minor corrections along the way and hope the public will eventually embrace their platforms. A few changes, such as smoothing the touchscreen interface oddities, and restoring a Start menu, might help on the PC over time, though I can’t see where most businesses would be interested, and the market is moving to tablets these days.

When it comes to smartphones, Microsoft doesn’t have a whole lot of time to make a compelling case for Windows Phone. The market is all about the iOS and Android. Is there room for another player? Well, Research In Motion is flatlining, and there are reports that RIM might want to license the OS and hardware. But that could be a precursor to finding a way for RIM to get out of the manufacturing business and stick with platforms and online services as long as they continue to survive.

When it comes to tablets, the arrival of the iPad mini may have helped reduce the momentum of the Amazon Kindle and Google Nexus 7. It may also soon become the mainstream Apple tablet. So where does Microsoft’s netbook-inspired Surface come into play? Nowhere it seems. Yes, the Intel (Pro) version of the Surface will debut next month, but will the ability to run Windows apps matter to customers who don’t care about Windows 8?

Unfortunately, Microsoft doesn’t seem to realize, at least publicly, that they are in trouble. Of course, there may be panic behind the scenes, and that would be a good thing if it means there will be important product changes to get Microsoft back on track. But it still may be too little, too late.

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4 Responses to “Windows Phone and the 2.6% Factor”

  1. DaveD says:

    Most folks when purchasing a PC do price comparison on the hardware. The Windows version, whatever it is, comes along with it. When they talk about their PCs, it is by the maker like HP, Dell, Acer, Asus, etc. Nobody would say they are buying a PC with Windows. It’s redundant.

    For Microsoft, no matter how many retail stores they opened, folks are not going out of their way to shop for a Microsoft PC with Windows. There is no “I gotta have one” with Surface (hardly anyone cares), only on the Xbox the gamers.

    About Office for iOS and Android, who cares? That ship had sailed away a few years ago. Probably at the time of the Windows Phone 7 celebration presenting a mock funeral for the iPhone and the Blackberry. At least, Microsoft may have gotten half-right on that. And for Microsoft… what goes around, comes around.

  2. blad_Rnr says:

    Microsoft is in serious trouble. Ballmer just doesn’t realize it yet. Win8 is a flop. Surface RT is a flop. PC sales are down 5% YOY. And declining still. MSFT isn’t charging the kind of prices they were for their OS back in the ’90s and early 2000s. On top of this, they are now in talks with Silverlake and Dell about taking Dell private. My guess is they want to start making their own PC hardware. They don’t have a clue about how to make a compelling OS, and now they want to enter that market? Against Apple? They will gnash their teeth for years trying to come up with compelling hardware that works with a less than stellar OS. In the end it will be more billions of dollars thrown away, just like they did with the Zune, Xbox for years, Bing, and a whole host of other failures.

    Good luck with that, Microsoft.

    • @blad_Rnr, With Microsoft investing in Dell, where does that place the other PC makers in the scheme of things? I can see where some of them would be happy to ditch the PC business, but this is no way to treat one’s partners.


  3. Tammy says:

    I think Google is in a very bad situation. Its success on Android has not brought the company any revenue / profit. With Samsung making 2 to 3 times more profits than Google and at an annual revenue that is 4 times of Google, Google cannot afford to continue offering Android for free and letting Samsung reap all the profits.

    What we will see in the near future is more intensified competition between Google and Samsung (and Amazon). Android’s fragmentation is unavoidable. This certainly does not bode well for the entire Android camp.

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