What’s the future for Windows Phone?

Windows Phone

Despite rumors of its potential demise, Microsoft likely to hold on to the mobile business to keep its hand in the market

Despite rumors that Microsoft is about to kill Windows Phone, some industry observers say that's unlikely for several reasons, especially the expected gains from the rollout of Windows 10, which will run on smartphones and other devices.

The rumors of Windows Phone's imminent death seem to have started with Microsoft's announcement on Monday that it sold its Bing Maps mapping technology to Uber and transferred about 100 workers in data analysis and image collection to the ride-sharing company. That announcement came the same day that Microsoft said it will exit most of its online advertising business in a deal with AOL.

Instead of running Windows Phone or the coming Windows 10 Mobile OS, future Microsoft smartphones would run on Android with particular apps and services pre-loaded, Techradar reported, relying on a tweet from MSFTNerd. (MSFTNerd only shares tweets with "confirmed" followers who must request access.)

Microsoft didn't respond to a request for comment on Tuesday.

Meanwhile, Microsoft last week released Build 10149 of Windows 10 Mobile to its Windows Insider preview group. The build includes the ability for voice assistant Cortana to send emails.

Indeed, the future for Windows Phone seems unclear, at best. That future is made no less clear by Microsoft CEO Satya Nadella's recently leaked email to employees that addressed the need to make "tough choices in areas where things are not working" at the company.

There was also the sudden departure of ex-Nokia boss Stephen Elop on June 17. This week, there's even a possibility that Microsoft could write off $5.5 billion from its $7.9 billion 2014 acquisition of Nokia.

At Mobile World Congress in March, Elop introduced Lumia phones that were set to ship in the fall running Windows 10. Windows 10 is a cross-platform OS which is designed to work with phones, tablets, laptops and desktops and has been hailed as a bold move by Microsoft. So far, however, Windows Phone has only garnered a fraction of the smartphone market, with a 3.2% market share expected in 2015, compared to 79.4% for Android and 14.8% for Apple's iOS, according to research firm IDC.

Given Microsoft's ambitions for Windows 10, three analysts said Tuesday that they didn't think Microsoft will give up on making smartphones with the Windows OS.

"It's way too early to throw in the towel on Windows Phone, but I can see the Uber transaction as a step in retreating on mapping," said Patrick Moorhead, an analyst at Moor Insights & Strategy.

Moorhead said Microsoft needs to be clearer about what the Uber transaction means for Windows Phone, if only to keep its Windows developers in the loop. "Many developers are watching Microsoft for any sign of a lack of commitment," he added.

Ezra Gottheil, an analyst with Technology Business Research, called it odd that Microsoft is divesting itself of its mapping data to Uber, but added, "it doesn't imply anything necessarily about the phone."

Gottheil predicted that Microsoft will keep Windows Phone alive in future iterations, but will "not invest in trying to drive more market share." Microsoft will want to give Windows Phone enough presence in the market to keep developers involved so that Microsoft "is in the position to take advantage of future opportunities. …There may be opportunities to make Windows Phone a viable OS at some point."

Windows 10 will provide a "much better integrated experience between the phone and the PC," Gottheil said, which is vital since Windows PCs still dominate the desktop and laptop market. Windows 10 could work with phones on different operating systems, and Microsoft could also work to develop a security product with Android, he suggested.

Windows 10 shares a common central kernel across platforms with "various pieces for various platforms," Gottheil noted. "They say it is 'write-once and run anywhere,' and that's kind of half true. You can't fit a lot of things you run for Windows server on a phone."

Still, he concluded, "It's not terribly expensive to keep the mobile OS going. They might as well play it for the long shot. I wouldn't abandon Windows Phone if I were Microsoft."

Ramon Llamas, an analyst at IDC, said the Uber transaction and other recent moves at Microsoft are "not the end of Windows Phone." IDC recently predicted that Windows Phone, or whatever it is called in coming years, will grow to 5.4% of the market by 2019.

"It will be single digits [market share] going forward, which is big for Microsoft, but not much of a dent into Android or iOS," Llamas said.

One decidedly negative view came from Jack Gold of J. Gold Associates. "I've said for a while now that Windows Phone is a distraction for Microsoft," he said. "They need to get out of the smartphone business, so the sale of the old Nokia phone business or a shutdown is high on my list of predictions."

Gold predicted Microsoft will spin off or sell the phone unit within the next year. "Elop's moving on was a big indication of this," he said. "A bigger problem for them will be trying to find someone who wants to buy the business as a whole."

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