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Is Microsoft Done With Phone Hardware?

Was this the direction Microsoft should have taken?

A few sites have picked upon an SEC filing made by Microsoft, as well as language used by CEO Satya Nadella, that point to Microsoft potentially being about to write off its phone hardware business, the part of the company formerly known as Nokia.

If this really is on the cards it will mark the end of a disastrous partnership that failed to ignite the market despite delivering excellent combinations of hardware and software.

Earlier today I wrote about fixing the app gap and the last opportunity for Microsoft to do this at Build 2015. I still believe that Microsoft has that opportunity. However even if it does deliver a fix Microsoft may not see it being a business it can have a long term future in. Cost of sales exceeds the value of sales. That isn't good business and whilst sustaining a short-term loss could be justified in search of longer term profits, almost four years since Microsoft bet the farm on Windows Phone 7, it's still losing money on the platform.

If Microsoft is thinking about killing its phone hardware business will it also kill Windows Phone? Probably not. It has made changes that should allow OEMs to easily create Windows Phone builds for existing Android hardware, so it may maintain the offering in a bid to build market share more cheaply.

What remains a more interesting strategy would be to continue down the path that the Nokia X trod: a Microsoft version of Android. It already offers most of its apps on the platform, so taking some ownership seems like a logical next step.

Two thoughts strike me. If Microsoft does follow this route will it release an Android Live Tile launcher so that some semblance of Windows Phone lives on? And was the wholesale abandonment of Windows Mobile really justified given what has since transpired. That platform had some capabilities beyond those available even now, a loyal user base and only needed reworking for reliability to remain competitive with Android.

Whatever the reasons and recriminations Microsoft's acquisition of Nokia is looking more and more like a $9bn disaster. And its not the first time the company has been here.


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