How Microsoft Missed Its Chance To Disrupt Smartphones

Nokia-Lumia-1020-with-Camera-Grip

Windows Mobile handset sales have crashed through the floor in the last twelve months, after half a decade of slow but steady growth. Whilst the platform might live on, realistically any hope of turn the current two vendor smartphone market into a three-way battle disappeared when Satya Nadella took over the reins.

There was only an outside chance of it happening anyway.

The problems that platform faces today – dropping sales, lack of vendor engagement, limited third party hardware support and massive disinterest from the rest of Microsoft – don’t just stem from Nadella’s decision to make smartphones a low priority item. They are the result of five years of missed opportunities.

Today the smartphone market has reached a plateau. iOS and Android are mature and match each other feature for feature. There are reasons why an individual might choose an Android over an iPhone or vice versa, but in the main both platforms do everything you might want from your smartphone.

As a result a third entrant into the market is going to have significant problems breaking into the market. There’s no weakness to set a lever against to create a gap for a third party.

Its analogous to the Pepsi – Coke argument. You’ve got everything you could possibly want from a cola drink right there. Personal preference might point you to one brand or the other but there is no room for a third competitor in that market and no gap to disrupt into. The last attempt to do so was made by Virgin, decades ago. Even with that supremely strong brand it was an unmitigated disaster.

So right now if you aren’t Coke or Pepsi you’re selling your cola based on price – supermarket own brands or those weird no-name concoctions that you find in corner stores.

The smartphone market hasn’t always been this way though. Microsoft, particular after getting Nokia onboard, had a real opportunity to carve a huge slice of the smartphone market for itself and appears to have managed to sabotage its own efforts to do so.

Photography. Since the arrival of the Lumia 800 / 900 the best phone camera you can buy has been on a Windows Phone device. For most of that time the gap to the next nearest competitor in camera quality has been laughable.

And Microsoft and Nokia managed to make a complete hash of their opportunity.

Look at the quality of Apple’s ‘Shot on iPhone’ ads. Photography is a top three use case for every smartphone buyer out there and Apple knows it. Hence the focus on some quite remarkable iPhone photography.

Now look back over the last half decade. Exactly how hard did Microsoft and Nokia push the quality of the cameras on their devices? Where were the 920 billboards, the 1020 TV ads? Even the fact that mid-range phones could out shoot their competition was a trade secret as far as Microsoft’s marketing was concerned.

The camera on the Lumia 735, for example, is quite remarkable and embarrasses anything that sold at its price point and most phones above it. The Lumia 735 takes better pictures than its contemporary Xperia Z3, a phone that was nearly three times the price. Did Microsoft tell anyone? No.

All of the other features that Microsoft brought to the smartphone experience (and there are more than you’d think) pale into insignificance alongside the advantage it had in smartphone photography.

Had Microsoft made photography its priority and built marketing campaigns around its strengths, engaged with developers to produce photography apps that reinforced its advantage and pushed hardware partners to push camera performance to the fore we might well be talking about a very different smartphone market.

Instead, with market share at less than 1%,  Microsoft may be considering another pivot - to a Surface Phone focused firmly on business users. Given the successes that iOS is seeing in converting enterprise users I’d suggest that the Surface Phone will never achieve any sort of volume, and by its very existence would discourage Microsoft partners from entering the game.

If Microsoft wants to be a smartphone player it needs volume and volume is achieved either via disruption or price. The disruption ship has sailed and Microsoft has retrenched on its price based pitch.

Leaving the inevitable conclusion that Microsoft’s only future interest in mobile is as a software vendor.

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