Windows Phone growth stalls in the U.S. and China; trouble lies ahead

Windows Phone still can't gain traction in the U.S. and China, despite good sales in Europe, the latest sales figures show. And without growth in the two largest smartphone markets, the platform can't succeed, warns a prominent analyst.

The latest figures from Kantar Worldpanel ComTech have bad news for Windows Phone in both U.S. and China. For the three months ending in November, the report says:

"Progress in the world's two largest smartphone markets remains stubbornly slow with share stuck at 4.7% in the US and 2.7% in China."

Windows Phone continues to do well in Europe, with 10% or more market share in key markets including France, Great Britain, and Italy. In the largest European markets overall, Windows Phone has a 10% market share. But that's not good enough, warns Dominic Sunnebo, strategic insight director at Kantar Worldpanel ComTech. He writes:

"You don't have to conquer China and the US to win in the smartphone market, but you do need success in one of them. At the moment there are few signs of progress in either country for Windows Phone and momentum needs to be made soon before OS loyalty severely limits the available market."

Sunnebo doesn't hold out a great deal of hope for Windows Phone, largely because of Microsoft's purchase of Nokia. He believes that because Nokia has traditionally had a strong market share (aside from Windows Phone) in China, that country is a better target for Windows Phone growth. But Microsoft, he says, is likely to focus on the U.S. instead of China. He warns:

"China is likely to be the easier and more rewarding target for Windows. After all, Nokia has a huge existing presence in the market, retains strong customer preference and can sell handsets at the right price to capture the huge numbers of people with relatively modest budgets. However, with Microsoft soon running the show it's hard to imagine a change in strategic direction away from the US."

I think Sunnebo is right and Microsoft is likely to continue to target the U.S. rather than China. It's not just that the U.S. is the company's home turf. There's also more money to be made per unit sold with higher margins on higher-priced phones in the U.S. than on less-costly ones in China. But it's becoming increasingly clear that Windows Phone can't gain serious traction in the U.S. It's time for Microsoft to look towards other markets, especially China, if it wants Windows Phone to succeed.

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