Lumia sales slump sabotages Microsoft's strategy before it starts

But analysts aren't buying the idea that Microsoft's Nokia acquisition poisoned consumers' minds

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If they're right, Microsoft's chances of improving Nokia sales may not have taken much of a hit, if any. But that doesn't mean the Redmond, Wash. company doesn't face some huge challenges making the deal pay off.

"The challenge is two parts," said Nguyen. "First, the feature phone business is scaling down as they ramp up the Lumia line, but that's not ramping up as fast as the feature phone is ramping down. And as the industry as a whole has seen less true innovation, the fourth quarter isn't a blow-out quarter like it once was. The market's hitting the point, in developed countries anyway, where it's a replacement market now."

Milanesi said that while Microsoft clearly lost some of the momentum it had thought would be there, it could still make good if it hustled, something Microsoft has had trouble doing even in the recent past.

"It is critical that when [Microsoft] lands the deal, they go out and show something and say something," Milanesi said. "Microsoft cannot take six months to do that. It would kill them."

Moorhead was on the faster-not-slower bandwagon, too.

"Microsoft does have a distribution problem. When only two out of 100 phones are Windows Phone, it's very hard to drive meaningful share, it's hard to get developers excited, and creates a vicious circle," said Moorhead. "The top of everyone's mind in the channel and among developers is, 'What's next, Microsoft? How are you going to drive volume?' It needs a very early disclosure of what it wants to be in mobile, and must move as quickly as possible to do that."

While both Milanesi and Moorhead expect Microsoft to use its Build developers conference, slated to run April 2-4 in San Francisco, to clarify its handset strategy, Moorhead believes that might be too late.

"I don't think Build is early enough, but I do think that's where they'll give some disclosure," said Moorhead. "Microsoft will want to take advantage of the friendly environment at Build, where developers who are arguably pro-Microsoft may be able to influence those who are on the fence."

Whatever Microsoft does, and no matter what Nokia's final 2013 numbers were, all agreed that the former has a very hard row to hoe this year.

"The numbers hurt to some extent," said Jack Gold of J. Gold Associates "So how do you bring this back in the short term? That's the question."

"There's still an opportunity for Microsoft, but it needs to work with the carriers and look for those users who have low-end Android phones, who have not invested in the ecosystem," said Milanesi. "Those are the people Microsoft-Nokia should be going after. But they need to get devices on the market."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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