Microsoft Is Leaving the Phone Business

By Stephen Pate – The signs have been there for everyone to see. Microsoft is quietly but surely exiting the Windows Phone market.

The Build //2016/ developer conference last month in San Francisco had no announcements about Windows Phone, AKA Windows 10 Mobile.

If you didn’t notice the one presenter who used a Lumia 950XL in the above demonstration, it would be hard to know Microsoft launched three new phones in the past 6 months and Windows 10 Mobile in March 2016.

Microsoft Build is a conference for and about future products, pitching developers on what they should build their businesses. There was an abundance of talk about HoloLens and Artificial Intelligence Bots – products that consumers won’t see for years if not decades.

There was almost nothing about Windows Phone or Windows 10 Mobile. We should have expected this since Microsoft CEO Nadella clearly signaled last June that he was deemphasizing the Windows phone.

After losing $4 million on the phone business, Microsoft wrote off their $7 billion investment in Lumia smart phones, fired 18,000 employees many who were former Nokia staff. Nadella said Microsoft would make “tough choices.”

In the six months that followed, Microsoft lost half of its Windows phone markets and delivered 2 new Lumia phones that were considered defective. I tried to review both phones in November and December and concluded they were not ready for prime time. I returned them to Microsoft.

Microsoft had so many problems getting Windows 10 to work on smartphones that it removed 50% of existing phones from the upgrade list.

Windows phone users hear weekly rumors of an update that would cure-all the problems. The update never arrived but Microsoft did release a sort of final version that many users concluded was still not finished.

I gave up believing Microsoft will ever be a winner in the smart phone market months ago. While I continue to use my Lumia 920 it will probably be replaced by an iPhone, a smart phone that works. Most consumers are not even interested in the Windows Phone.

In an interview with Business Insider this week, Nadella said Microsoft will not deliver a “me too” product in the smartphone market. He held out the hope that universal apps and continuum would create a unique market for customers who want a smart phone with a difference.

“I’m not trying to be another phone guy with the other person’s rules. What is unique about our phones is this Continuum feature. If anything we will want to continue to build that capability out.”

“Just like how with Surface we were able to create a category. Three years ago most people would have said “what is a two-in-one”? And now even Apple has a two-in-one. And so three years from now, I hope that people will look and say, “oh wow, that’s right, this is a phone that can also be a PC.”

“Take emerging markets. India for sure is a mobile-first country. But I don’t think it will be a mobile-only country for all time…I would claim it’s a Continuum phone, which means that it can have other forms of input beyond touch.”

Microsoft has to pitch developers on future products to keep them on board. However most of these products will not be popular with consumers for years if ever.

Microsoft’s pitch to consumers is not convincing. You don’t need touch? Only Nadella believes that line. If you want a smartphone now or in the near future, Windows Phone will be a bad choice.

As for the Microsoft Surface, it’s more of a laptop than a tablet. The Surface does not work with touch in the same way as an Apple iPad. Without the keyboard and mouse, the Surface is a painful experience. I could live without the Surface 2, Surface Pro 3 and 4 I’ve owned but not without my iPad Air and iPad Pro.

As for AI Bots, they were promoted as the future in the 1990’s. Microsoft released a bot on Twitter in March and within days people had converted the clever bit of code to a Fascist loud mouth, a less than promising beginning.

HoloLens may be cool but suffers from two problems – really good software and who wants to wear goggles like that on their heads for very long?

For Microsoft the profit is in corporate business, the Cloud and Office. Xbox is a small part of their business and Windows phone is not even on the radar.

By Stephen Pate, NJN Network