Microsoft's possible new Windows Phone strategy: Go cheap, steal Android users

Windows Phone is still struggling to gain serious market share, but there's evidence that two related strategies could bear fruit: Get manufacturers to release low cost smartphones, and convert Android users to Windows Phone 8.

In the U.K., Windows Phone is already stealing Android users, and as a result, seeing dramatic growth. Kantar Worldpanel ComTech reports that Windows Phone market share there grew 240% from a year ago. In the three months leading up to January 2013, Windows Phone had more than 6% market share, up from 2.4% a year previous.

A lot of those new users switched from Android -- 17%, according to Kantar Worldpanel ComTech. Some 26% switched from Symbian, which should be no surprise, because the best-selling Windows Phone devices in the U.K. are made by Nokia, so plenty of Nokia owners are simply upgrading from older Nokia devices to newer ones. Only 6% switched from RIM and even less, a mere 2%, jumped from iOS. And 47% were first time buyers of smartphones.

Dominic Sunnebo, global consumer insight director at Kantar Worldpanel ComTech, said that the number switching from Android was good news for Microsoft:

"Understanding the source of growth for the Windows platform is crucial to devise and implement the right marketing and sales strategy. The fact that nearly one in five new customers switched from an Android device should give Microsoft, and its partners, confidence that its OS has what it takes to bring the fight to more established platforms. As almost 30% of its customers switch from rival OS's, the worry that Microsoft will have to rely on attracting the dwindling pool of first time smartphone buyers to drive future growth is reduced."

Nokia, meanwhile, recognizes that it can't succeed with Windows Phone devices if it only targets the upper and middle end of the market. To gain serious market share, it's got to go low.

Nokia CEO Stephen Elop told reporters at a roundtable, according to AllThingsD:

"Yes, we do have to continue to broaden the Lumia There's definitely an opportunity to push to even lower price points."

Nokia has already targeted lower prices than it has traditionally for its Windows Phone lineup with the Lumia 520, which will be priced at $183 without a contract, and potentially free with a two-year contract.

Even lower-priced Nokia Windows Phones would allow Nokia to target emerging markets, as well as people who want inexpensive phones for no-contract cellular access. Right now, there are plenty of Android users with low-cost phones. So if the U.K. experience holds, Nokia has a chance to convert many of them to Windows Phone.

Still, it won't be easy for a dual strategy of low-cost devices and poaching Android users to succeed. Elop admitted about the struggle to make Nokia's Windows Phone strategy succeed:

"I think it has been very hard. The amount of effort to break through in retail has been harder than anyone estimated."

And not everyone is a believer in the low-cost Windows Phone 8 strategy. LG, which sells plenty of low-cost phones, has said that it has no current plans to sell Windows Phone 8 handsets, according to CNet, which quoted a LG representative as saying that there's simply been not enough demand:

"We want to give customers what they ask for...When there's a significant market for it, we will be on board."

Still, the big market share growth in the U.K., due in part to stealing from Android, and Nokia's plans for low-cost Windows Phone 8 devices shows that there may be a new strategy that could help Microsoft succeed in the smartphone market.

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