Windows Phone sales stagnate -- will Android come to Microsoft's rescue?

The latest sales figures for Windows Phone are all bad: Sales have stagnated across the developed world, and Microsoft is losing ground in one of the world's largest markets, China. Could this mean that Microsoft needs Nokia's new Android phones to come to the rescue?

Kantar Worldpanel ComTech's latest smartphone sales figures don't bode well for Windows Phone. They show that sales in Europe's largest markets, where Windows Phone sales have made headway in the past, have stalled at around 10%, where they have been for months. Kantar Worldpanel ComTech calls Windows Phone's fourth-quarter results "underwhelming."

Windows Phone is managing to hold onto its 10% market share throughout Europe primarily through sales of Nokia's budget-priced Lumia 520, targeted at feature phone owners upgrading to their first smartphone.

Dominic Sunnebo, strategic insight director at Kantar Worldpanel ComTech, explains:

"Nokia has continued its successful tactic of sucking up remaining featurephone owners across Europe. Even in Britain, where smartphone penetration is at 70%, there are over 14 million featurephone consumers for it to target. At some point Nokia will have to start making serious inroads into the smartphone competition, but for the time being its strategy in Europe is working. Crucial for Nokia will be its ability to keep low-end owners loyal and upgrade them to mid to high-end models."

In the U.S. there seemed to have been a glimmer of good news, with Windows Phone market share at 5.1%, up from 3.4% a year ago. In fact, though, even in the U.S. sales have overall been stagnant. Nearly a year ago, in both March and April, 2013, Windows Phone sales were 5.6% of the U.S. market. That means that Windows Phone has lost ground since nearly a year ago.

In China, the news is even worse, a 0.7% market share, half of its 1.4% market share a year ago.


Will it be Android to the rescue? Nokia yesterday announced at the Mobile World Congress 2014 three low-end Android phones, although "Windroid" may be a more accurate description. They'll be Android-based, but their services will be from Microsoft rather than Google, including Bing instead of Google search, instead of Gmail, OneDrive rather than Google Drive, and Nokia's Here maps rather than Google Maps. The interface will look more like Windows Phone than Android. That way, Microsoft gets revenue from services via delivering ads. And Microsoft also hopes that when users of the phones make their way up the economic ladder, they'll buy more expensive phones, and if they're using Microsoft services and a Windows Phone-like interface, they'll move to Windows Phone handsets.

The phones are targeted at the developing market, because Windows Phone requires more expensive hardware than people in those markets are willing to pay for. But what if Nokia and Microsoft used the same tactics in other places in the world, notably Europe, not just developing markets? In Europe, Windows Phone is anchored by budget-minded people upgrading from feature phones to smartphones, and buying the low-cost Lumia 520. What if Nokia developed budget Windroid phones for the European market? Android has a 68.5% market share in Europe's largest smartphone markets. That means it's ripe for Nokia Windroid phones.

I don't expect this to happen, at least not right away. But eventually, if Windows Phone sales continue to stagnate, and Nokia's Windroid phones sell well in the developing world, Nokia could eventually release Android phone with underlying Microsoft services and a Windows Phone-like interface into Europe as well.

Copyright © 2014 IDG Communications, Inc.

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