Microsoft Reports Phone Sales Collapse, But Mix Gets Richer

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Seeking out the good news for Microsoft’s phone business in today’s earnings report is a thankless task. Sales were down enormously – a 75% drop from this time last year. As the smartphone market as a whole is reported to be in slowdown that’s no surprise, and many reports have prepared us for these bad numbers, but such a massive abandonment of the platform by customers is pretty scary all the same.

There is marginally less bad news (at the moment calling anything relating to Windows on phones good news is just too much of a stretch) in that revenue only fell 47%, to $746m. That means that the average selling price for Microsoft handsets almost doubled year on year, jumping from around $170 to $325 per unit. At that level it might even have turned a small profit (although it probably didn’t).

Microsoft’s decision to ‘Osborne’ its mobile platform through a series of executive briefings and decisions that damaged the platform’s standing in the minds of even its most fervent supporters is having a real effect now.

That’s a shame, because Windows 10 Mobile easily stands comparison with iOS and Android and is changing faster than either.

Microsoft may have a big plan to come in next year with a Surface Phone that delivers everything that consumers, enterprises and professionals want from a phone, but by then will the Windows 10 Mobile mindshare have sunk too low for it to matter?

I worry that it will.

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