Microsoft hasn’t given up on Windows phone, but it’s been a very bad year

Laurent Giret

Lumia 950

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While 2016 has been a great year for some of Microsoft’s hardware efforts such as the Surface line or the Xbox One, the past 12 months have been pretty brutal for Windows Phone fans. In late 2015, the company made it pretty clear that it had scaled back its mobile ambitions as the fifth generation Lumias failed to convince both the tech press and nostalgics of Nokia’s premium designs.

But if the lack of exciting new hardware was not enough, Windows 10 Mobile also failed to get significant momentum this year as Microsoft backtracked on its promise to roll it out to all Lumia handsets running Windows Phone 8.1. This probably led many enthusiasts to leave the platform, which also still struggles to attract the most popular developer of mobile apps and games.

Of course, Windows Phone still has a small passionate fanbase, and Microsoft execs repeatedly said this year that the OS was still fully supported by the company. Still, it has become very hard to recommend the purchase of a Windows phone to anyone that is not familiar with its flaws. Did Microsoft blow its chances to ever be relevant in the mobile market? Well, we have some doubts about 2017 bringing better news for the struggling platform, though Microsoft’s commitment to support the platform is encouraging.

Windows Phone market share fell of a cliff this year

While Windows Phone’s market share never reached double digits in the US, the mobile OS did achieve some momentum in select European markets two years ago. Unfortunately, things started to go south when Microsoft failed to release great handsets between the launch of the Lumia 930 in mid-2014 and the release of the Lumia 950/950XL in late 2015.

Nokia mclaren
Microsoft canceled the high-end Nokia McLaren in late 2014

Last year, the company also laid off 7,800 employees and also wrote down $7.6 billion from its acquisition of Nokia’s mobile business, signaling a shift in strategic direction. Moreover, the company also switched from the Nokia brand to the Microsoft brand starting with the Lumia 640, while the fifth generation handsets moved away from the colorful shells that Lumias have always been known for.

It’s also safe to say that we barely saw new exciting hardware this year. While the HP Elite x3 generated some interest in the past few months, its premium price and business focus will likely make it remain a niche device. It’s also worth noting that while Windows 10 Mobile is an OS for phones and small tablets, 8-inch tablets such as the Alcatel PIXI 3 never saw the light of day following their CES 2016 introduction.

Not surprisingly, the global market share of Windows Phone fell below 1% this year, which is barely a blip on the radar. Market research company IDC expects Windows Phone sales to reach 6.1 million units this year (0.4% market share), down 79.1% year over year. In 2020, the company expect sales to decrease to just 1 million units, though a lot of things could change in the next four years.

Windows phones sales will reach an all-time low in 2016.

This year, Microsoft also stopped reporting Lumia sales during its quarterly earning results, though let’s not forget that the company doesn’t disclose its Surface and Xbox sales either. Still, mobile continued to be a big loss for the company in the first quarter of its fiscal year 2017, with phone revenue declining 72% from last year.

Microsoft failed to improve the app situation

In July 2015, two weeks before the release of Windows 10, Microsoft CEO Satya Nadella gave a lengthy interview to ZDNet where he explained his new mobile strategy. “We will do everything we have to do to make sure we’re making progress on phones,” explained the exec, adding that the “the free upgrade for Windows 10 is meant to improve our phone position.”

Yes, the CEO believed that by growing the Windows 10 user base, the Windows Store would become much more attractive for developers. “If you come to Windows, you are going to be on the phone, too,” explained Nadella. While this is true in a certain measure, so far the Windows Store still lacks many apps that make Apple and Google’s app stores so attractive. More importantly, some high-profile apps also vanished from the store this year while a significant number of them have yet to be updated to leverage new Windows 10 features.

Facebook was one of the few big developers to support Windows 10 this year.

But this poor app situation can also be explained by the very low market share of Windows 10 Mobile. According to AdDuplex, only 16% of Windows phones were running the latest mobile OS in December. Earlier this year, the cross-platform promotion network for Windows apps and games explained that half of Windows phones were capable of running Windows 10 Mobile, though Microsoft never pushed the update to all eligible handsets. As of today, installing the update still requires the installation of an dedicated app, a process that only power users are familiar with.

Is Microsoft right to focus on business users?

Microsoft pivoted Windows Phone many times over the last two years. Back in July 2015, Nadella explained to ZDNet that the company was now targeting three different segments (fans, value buyers and business users), adding that if nobody else make Windows phones then Microsoft would make them. “If there are a lot of OEMs, we’ll have one strategy. If there are no OEMs, we’ll have one strategy. We are committed to having the phones in these three segments,” the CEO explained.

The Lumia 650 was the last Windows 10 Mobile handset to be released by the company this year, and Microsoft is still marketing it as a phone for business users. However, unlike the Lumia 950 or the HP Elite x3, it doesn’t support Continuum.

Microsoft advertises the Lumia 650 as a business phone.

But is Windows 10 Mobile any good for business users? Well, Microsoft made it easy for IT administrators to manage fleets of Windows 10 Mobile devices, but what about users’ needs? Indeed, Windows 10 Mobile still lacks several basic productivity features, as the Outlook Mobile app doesn’t support Outlook tasks or even searching for calendar events. Windows Phone may have a quite similar market share, but’s it’s no Blackberry yet.

As of today, Windows 10 Mobile remains obviously an OS for fans and Microsoft enthusiasts. An OS for people who know what they’re buying and who are aware of the app gap and its other flaws. Additionally, 10.4% of Windows 10 Mobile users are currently running a Redstone 2 build according to AdDuplex, which is quite significant.

And while not all fans may be willing to spend more than $400 on a Windows phone, it seems that a lot of them still did. According to AdDuplex’s latest stats, the Lumia 950 is currently the #2 most popular Windows 10 Mobile handset in the US, and the third most popular “native” Windows 10 Mobile handset worldwide.

The Lumia 950 is the #3 most popular “native” Windows 10 Mobile handset worldwide.

Does Windows 10 Mobile have some real killer features today?

Back in the Windows Phone 8 days, Microsoft’s mobile OS probably offered a slightly more differentiated experience: yes, you already had live tiles, but you also had the messaging hub, the contacts hub plus exclusive Nokia features such as Glance screen and more. Today, Windows 10 Mobile has Continuum, which makes a great demo but is hardly a real problem solving feature. Continuum may be nice to have as a backup solution when your laptop is failing you, but it’s way too limited to offer a great computing experience as of today.

If you care about that, “Windows as a Service” and its regular schedule of updates may be one of the best features of Windows 10 Mobile. Unlike Android users who often have to wait for months to receive any updates, Microsoft pushes monthly cumulative updates to all Windows 10 devices. Last but not least, major updates such as the Anniversary Update rolled out pretty fast too, as this version now represents more than 92% of the user base according to AdDuplex.

Continuum is not a killer feature yet.

But overall, it’s hard to find any exclusive feature on Windows 10 Mobile that Android or iOS users could be jealous of. Nearly all Microsoft services are available on other mobile platforms, and more often than not the company’s iOS and Android apps are better than their Windows 10 counterparts. If you have an Android handset, you can even use Cortana to sync notifications between your phone and Windows 10 PC. And if you care about that new SMS Relay feature in the Skype Preview UWP app, it seems that it may soon become available on Android as well. Lastly, it’s worth repeating that the chronic lack of popular apps and games such as Snapchat, YouTube, Pokemon GO and more make Windows phones really hard to sell today.

What to expect in 2017?

While the leaked Windows 10 Build 14997 revealed several interesting new features coming in the Windows 10 Creators Update, we still don’t really know what this major update will bring to Windows 10 Mobile phones next year. However, the company teased several Continuum improvements earlier this year such as support for the Xbox One controller, windowed apps and more, and these will be welcome improvements. “What is unique about our Windows phones is this Continuum feature,” shared CEO Satya Nadella earlier this year, and we expect the company to continue to bet on it to create what Nadella teased as the “ultimate mobile device.”

Moreover, the Windows 10 on ARM announcement may well change a lot of things for Windows 10 Mobile going forward. Next year, we may see a first wave of “cellular PCs” running Windows 10 on a Qualcomm Snapdragon ARM processor, with full support for legacy Win32 apps through emulation. If this emulation technology eventually comes to Windows 10 Mobile ARM64 devices, Windows phones may well become much more versatile in the future, even though this wouldn’t completely solve the app gap problem.

As for new handsets, Microsoft Chief Marketing Officer Chris Capossela shared some encouraging news during the last episode of Windows Weekly. “In the near term, we’re going to continue to work with our OEM partners and hopefully have some great devices for people who want to stay on Windows for their mobile and their phone OS,” he explained. While the exec did not confirm that new first-party hardware was in the pipeline, Capossela did share that “we’ll have great new things in 2017.”

Still, we may not see any game-changing stuff until the release of the Redstone 3 update in late 2017. Until then, more of the few remaining enthusiasts may well quit playing the waiting game and switch to another mobile platform, and that’s perfectly understandable. Windows 10 Mobile really needs a killer feature and killer hardware to stay relevant, but fortunately it seems that Microsoft is well aware of it. However, it also means that the future of Windows 10 Mobile may only live on high-end, premium handsets such as the HP Elite x3, because let’s admit it, there is no point in purchasing a low-end Windows phone with no apps and no Continuum support.

We still believe that there is room for a third player in the increasingly saturated mobile market, but as of today Windows 10 Mobile is clearly not good enough to play that role. Of course, we’ll keep using our Lumias and report on all Windows 10 Mobile news, but Microsoft obviously lost a lot of fans along the road this year. We really hope to see game-changing stuff next year, but until that, Windows Phone will likely remain what it has pretty much always been: an interesting, promising platform that still lags behind iOS and Android.