Microsoft accepted it defeat on that part of the industry and is changing its strategy. To be fair, we all saw it coming some time ago, but it took the determination and realistic point of view of a CEO like Satya Nadella to make the appropriate painful decision. Microsoft’s CEO recognized that all those years of the company’s efforts to make a solid income from the smartphones market went to waste. That was stated by Satya with a message sent inside Microsoft with which he fired 7,500 employees of the company and also mentioned the damage of 8 billion dollars that Nokia’s purchase costed.
Nadella decided to change strategy and the company’s priorities in a way that includes a gradual departure of Microsoft from the smartphones industry and the beginning of the end of Windows Phone.
It may not be a pleasant surprise but with what has been said Microsoft was left with no other choice. After an many billion dollars investment in the last 7 years, the Windows Mobile/Windows Phone have not managed to get more than the 3% of the market’s share on a global scale. More than 90% of the mobile phones with the Windows Phone OS are Lumia – the main reason for which Microsoft invested in Nokia. But while the sales were increasing slowly, this didn’t happen fast enough to catch up with the sales that are being noted in smartphones that run with Android or iOS. Combine that with the low quality of apps and peripherals that was developed around Windows Phone, and you get the inevitable conclusion: This investment would never bring any profit to the table. Thus Nadella’s hard and painful for the company (even for some consumers we might add) decision.
Microsoft’s CEO on his message underlined that the company’s smartphones will continue to be available on the markets but with a different approach. In fact, the number of new devices that are promoted will be drastically decreased and the company will put more weight on proposals that are targeting businesses, whether those are hero devices or not.
There are however some problems that occur on the strategy that Nadella describes.
On the one hand, there are the already existing devices. It is known that with the way the smartphones market has been shaped only Apple has significant profits from the sales of devices. All the other rival companies either have no considerable profit, or are damaged and hope to make it up by other sources that are connected with the sale of a smartphone. Given the above, for how long will Microsoft promote new Lumia smartphones? Could this be a fade out type of plan?
On the other hand, the problem is the Windows 10. With smartphones being taken away from the big picture in Microsoft’s canvas, the Windows 10 are getting weaker towards the programmers who have one less motive to invest time and resources to Microsoft’s system. Let’s not forget that the only device that we always carry with us is not a laptop, a tablet or an Xbox One, but our smartphone.
However, despite those two problems mentioned above, Microsoft is a company that has its own plans for the future, something that can be proved by projects such as the HoloLens, the use of the cloud to many of its products and services, and the company’s interfere with the famous Internet of Things. In other words, they seem to know what they’re doing, so with Nadella’s strategy, they can make things work.