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Microsoft on 'Threshold' of Windows Phone growth

Matt Hamblen | Dec. 5, 2013
The Windows Phone sees some success in U.S., Europe amid continued problems in China

Recent successes for Windows Phone smartphones in the U.S. and Europe continue to be overshadowed by challenges the platform faces in China and elsewhere.

The Windows Phone operating system still ranks third globally, far behind Android and iOS, yet most experts say it will have staying power for years to come. That's because software giant Microsoft has deep pockets and clearly wants to keep the OS durable. Microsoft and Windows Phone will also get boosts as the company converges the mobile OS into the Windows operating system.

Nokia Lumia 920
The Lumia 920 smartphone with Windows Phone 8 (Credit: Nokia).

Smartphones running the Windows Phone OS took nearly 5% market share in the U.S. in the third quarter ending Sept. 30, and topped 10% in the combined five-biggest European countries, according to data released Monday from market research firm Kantar Worldpanel ComTech.

The momentum for Windows Phone comes from low-cost handsets, such as the Nokia Lumia 520

Meanwhile, China, the world's largest smartphone market, remains challenging for Nokia and Windows Phone, with their market share languishes at 3.5%, according to Kantar analyst Dominic Sunnebo. A variety of Chinese smartphone makers selling Android devices at low prices but with high-quality specifications have dominated the Chinese market.

Sunnebo said Microsoft should partner with a major Chinese brand, but that "does not look likely to happen soon" because of Microsoft's planned takeover of Nokia.

Success in Europe seen as limited
The recent Windows Phone success in Europe is probably limited and won't drive sales in China or other countries with major economic growth in coming decades, such as India, Brazil or Russia.

"Microsoft's takeover of Nokia, based in Finland, may actually hurt [Windows Phone] in Europe, if it doesn't keep the Nokia brand, and I expect Microsoft won't keep the Nokia brand," said Jack Gold, an analyst at J. Gold Associates.

Even in the U.S., Windows Phone struggles to grow. "In the U.S., people who work at mobile phone stores haven't embraced Windows Phone, and until they do, it will remain a backup choice to iPhone and Android," said J.P. Gownder, an analyst at Forrester.

In China, Gownder added, inexpensive Android devices are "incredibly popular" partly because Android enjoys local Chinese developer and language support.

"Both the U.S. and China are top smartphone markets, and the Chinese market is going like gangbusters," added Kevin Restivo, an IDC analyst. "You have to be highly exposed in both markets if you want to be a global powerhouse, but Windows Phone has minimal share in both countries."

Microsoft to back Windows Phone for long haul
Even with its struggles over Windows Phone, Restivo and Gold agreed that Microsoft will probably support Windows Phone for the long term even if it doesn't gain much more than 10% market share and remains stuck in third place.


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