Microsoft's Mobile Conundrum
Sat 21 March 2015
Introduction
Microsoft has a fairly good mobile platform but it is late to the game. There are already two market leaders: Apple has been focusing on profit-share (the most profitable part of the market, in other words) and Google on market share.
Microsoft is finding it difficult to attract developers to write apps for its mobile platform. It appears to have embraced a two-pronged approach to solve the irrelevance problem.
- Converting its army of desktop application developers into mobile app developers (universal apps that run on desktop and mobile).
- Cornering as much as possible of the price-sensitive sub-$200 smartphone market.
We’ll look at the second approach in this article.
Recent new phone models
Microsoft announced its new lowest-priced Lumia mobile, Lumia 430 ($70), nearly eight weeks after the previous announcement of the lowest-priced Lumia at the time - a Lumia 435 (€69) and a Lumia 532 (€79). There is no word for quite about any flagship mobile. What is the reason behind this race to the bottom?
UI responsiveness and playing to strengths
Windows Phone 8.1 supports only Qualcomm snapdragon processors so far and the company appears to have optimised the software to be very responsive on this hardware - buttery smooth would be an apt description. Almost no Android device at similar price points can come close to Lumia phones when it comes to UI responsiveness.
Every Lumia phone released so far runs on these Qualcomm processors. What Microsoft has been attempting to do during the last few months is to play on this strength and corner the entry level smartphone market.
Developed markets with pre-paid phone usage
In some developed countries where there is sizeable pre-paid users (mostly Europe), Microsoft is marketing these phones as the best first mobile for teens or as backup phones for others. It is an interesting strategy and we have to see how consumers respond to it.
Increasing consumer base in developing markets
In Developing markets such as India where people pay full price of a device upfront (irrespective of whether they sign a contract), a large segment of the market is price-sensitive. In addition, consumers only use a handful of apps and are platform-agnostic as long as these ‘core’ apps are available on a mobile platform. WhatsApp, Facebook, Youtube, music/video player and a browser are these must-haves. It is not uncommon to see them switching platforms based on technical specifications (Camera Megapixels) and responsiveness of a phone.
Once Microsoft gives a taste of its platform to these consumers, it can then up-sell at least some of them to its higher end phones - as and when it introduces them.
The net effect of this strategy - if it succeeds - is to increase the share of Windows mobiles among the smartphone users. This helps it break out of the chicken or egg problem where few developers target Microsoft mobile platform because there are not many users and few users look to Microsoft mobile because there are not many apps.
Microsoft is playing this game in one of the largest markets in the world - India where Nokia/Lumia still have good brand recognition. Recent announcement of a collaboration with Xiaomi, a fast-growing Chinese company assumes significance in this light - a ‘china strategy’ perhaps.
It appears to be making strides so far and quarterly sales figures for the next couple quarters might prove to be a watershed moment for Microsoft.
Interesting times!