Why the Windows Phone Failed
The Windows Mobile was a product that had everything going for it and so much potential, but nevertheless failed miserably. The Windows Phone was a costly misstep for Microsoft, as seen by its lack of success despite the company’s enormous financial resources and valuable relationships.
Former Apple CEO Steve Jobs rocked the smartphone industry in 2007 when he unveiled the iPhone. Before then, smartphones had a significant issue. The reason for their difficult-to-use interfaces and small screens was because the keypad took nearly half of the phone, with little buttons that were difficult to click precisely.
Apple & iPhone
Not just Apple aficionados observed as Steve Jobs demonstrated a game-changing idea to his enthusiastic audience. The Google developers had been developing a touchscreen smartphone for the previous two years. It would take them more than a year to release their flagship product, Android, by which time the iPhone had become the industry standard for smartphones.
The guiding principle of the iPhone was designed to be exclusive. Apple developed the phone in its entirety in order to maintain complete control over the product’s quality and user experience, enabling them to charge a premium for their phones. Android would need to take a different approach in order to be successful. Rather than aiming for exclusivity, Google made an effort to be everyone’s friend by collaborating with as many phone makers as they could, with the selling point of their phones being their affordability combined with functionality.
The smartphone market was briefly in equilibrium, with Android and the iPhone holding totally distinct market shares. And yet Microsoft, another behemoth in the tech industry, was about to upset this equilibrium. It turns out that Microsoft was the company with the most mobile device experience out of the three.
Microsoft & Casio
Microsoft CEO Bill Gates introduced the “handheld PC” (really more of a little laptop) back in 1996, which was the Casio unit. It was running Windows CE, an operating system that was essentially Windows 3 adapted to run at the lowest available specification. Microsoft would make six more complete releases and add functionality to this product line over the course of the following 10 years. With the exception of Symbian from Nokia, Microsoft’s mobile devices claimed a 15% market share between 2006 and 2008.
However, it was precisely this success that made Microsoft, plus the CEO’s of Blackberry and Palm oblivious and dismissive to the iPhone’s threat.
Microsoft had to experience a decline in market share for an entire year before realizing that action was required. Blackberry’s sales were still rising, in contrast to Microsoft’s, and this gave them a sense of confidence from which they never fully recovered. Nevertheless, Microsoft made great progress when they eventually got around to it.
The Windows Phone
Microsoft started working on a mobile device with a touchscreen in late 2008, and it took them just two years to get it to market. They revealed a truly innovative product that deserves more recognition for its development in smartphone design than it now receives.
The Windows Phone provided users with tiles that displayed real-time information, while the iPhone and Android were limited to static icons. In general, critics were full of praise. Because Microsoft had very rigorous standards for the hardware used by phone manufacturers, all of the early Windows phones were quite powerful computers for their time. In terms of design, the Windows Phone user experience was right up there with Apple’s.
However, Microsoft encountered a major problem quite early on. Microsoft was attempting a really challenging task. It was aiming to impose rigorous control over the hardware and user experience, much like Apple, but it wasn’t actually producing its own phones. Because of this strategy, the Windows Phone was a lot more polished device than Android, but the level of control Microsoft desired made cooperating with them far more challenging for phone makers.
Microsoft & Nokia
Not unexpectedly, the majority of phone makers chose to work with Google, which put Microsoft in an awful bind. It had a fantastic product, but no one was producing it. Microsoft’s only hope for survival was a chance connection. Stephen Elop, a former Microsoft executive, took over as CEO of Nokia in September 2010, and his first priority was to try to reverse the company’s decreasing market share by ditching Symbian and moving toward Windows Phone.
It’s evident that this was a well-thought-out plan because Nokia underwent a significant transformation in only a single year, drastically altering their range of products. In November 2011, Nokia began offering their first Windows Phone for sale. Microsoft paid Nokia billions of dollars in platform support fees, which made this feasible.
Though Nokia was purportedly paying Microsoft a licensing fee, in actuality, the company was receiving $250 million in return from Microsoft each quarter, more than offsetting its costs. Naturally, this was known to the other phone manufacturers, which further distanced them from Microsoft. Ultimately, if Nokia was receiving it all for free, why would they finance their own development and pay Microsoft a licensing fee?
In essence, Microsoft had fully committed to Nokia, and there seemed to be no turning back. However, it was regrettably much too late for Microsoft. Four years after the iPhone’s launch, Microsoft had reduced its market share to 2% by the time it resolved its production problem. It seemed senseless for anyone to create programs for the Windows Phone when Android and iOS were evidently the winners in this contest.
The Windows Phone App Store had nothing in its first three years of existence. It had very little — it had YouTube and Instagram, for example. When Nokia’s stock price dropped by 75% in 2013, irate shareholders threatened to dismiss Stephen Elop and dissolve Microsoft as a whole. That ultimately did not transpire.
Alternatively, Microsoft simply paid $7.2 billion to acquire Nokia’s mobile phone division in 2014. Microsoft paid down their $7.6 billion investment the very next year. To cap it all, they let go of nearly 8,000 workers. It was obvious that Windows Phone was dead a long time before Microsoft maintained it on live support until October 2017. Nevertheless, it’s simple to see how Windows Phone might have developed differently if its founding principles hadn’t been so cavalier.
If Microsoft had been prepared to give up some of its production control, it could have easily persuaded the major manufacturers to switch from Android to Windows Phone. After all, Microsoft had been a software juggernaut for decades at the time, while Google hardly had an ecosystem at all.
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