Microsoft Mobile Strategy Is Well Off Beam Right Now


The warnings in Microsoft's SEC filing about its potential write off risk relating to the business formerly known as Nokia contained some information that suggests that the Microsoft of Satya Nadella is perhaps no better than that of Steve Ballmer when it comes to plotting strategy.

The statement included the following line when talking about Microsoft's most recently reported quarter: "Phone Hardware did not meet its sales volume... the mix of units sold had lower margins than planned". Now as an outsider I can't say I'm particularly shocked. Microsoft hasn't launched a high end handset since the Lumia 930 broke cover in April last year. Since then it has released six low end (43x, 530, 535, 63x, 640, 640XL) and two mid-range phones (73x, 830).

Who in the company thought that this was a strategy that was going to increase the margins of handsets? In fact, given that we now know that Microsoft lost $0.12 per handset in cost of sales alone, as far as the bottom line is concerned fewer sales than expected was a good thing.

So either Microsoft is executing a strategy where it gives up margin in order to secure sales growth or it looks to make a return from its mobile phone business.

It just sounds to me like the company really doesn't know which strategy its trying to execute.

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