Microsoft Corporation (NASDAQ:MSFT) was in the news last week after it revealed that it was writing down its $7.6B purchase of Nokia Corp. The writing down of the Nokia deal is part of a larger plan by Microsoft to drop non-performing assets. However, recent news suggests that Microsoft might take one last shot at making smartphones.
Last Week, Microsoft CEO, Satya Nadella wrote an email to Microsoft workers about his plan to sharpen the firm’s business focuses. He talked about the $7.6B charge for the Device and Services business that Microsoft bought from Nokia last year.
He then gave fresh insight that suggests a last push for breaking out into the smartphone business. Nadella said, “we are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family“.
Nadella’s words are contrary to thoughts that Microsoft might be leaving the phone business. In fact, the firm might be coming to the market with an array of smartphones. In the past, the firm was entering the smartphone market with one Nokia Lumia phone per time. Nadella says, “we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group.”
Why Microsoft Can’t Abandon Mobile
Jan Dawson from Jackdaw Research provides a thesis on why Microsoft can’t exit the phone business right now.
In a recent blog post, he said that Microsoft holds 95% of the Windows Phone market and the firm won’t want to kill a segment that bears its name that easily. Secondly, Microsoft has invested much resources in the Windows 10 line for universal apps that works on mobile, tablets, PCs and laptops. In essence, the beauty of the Windows 10 OS will be marred without a vibrant phone line.
In summary, “the timing just doesn’t seem right for abandoning either Microsoft’s first party phone business or Windows Phone as a whole“.
Is Microsoft Being Smart in its Last Attempt at Mobile?
Microsoft simply came late to the mobile party and all its recent effort was an attempt to cover lost ground. The firm might still be able to save itself in the smartphone space if Windows 10 performs very well. The Windows 10 OS could do for Microsoft what the iOS and Mac OS did for Apple in keeping users within its system across many devices.
Microsoft might not be able to steal market share from Apple, many people who use an iPhone have dropped Windows PCs for Macs because of the Apple ecosystem. However, Android users will most likely be using Windows PCs because Android is mobile only and Google’s Chrome OS has yet to find a footing.
Hence, Android users might be inclined to experience a unified ecosystem on smartphones, tablets and laptops. Microsoft should be able to eat into Android’s market share if it can port most Android apps to its Windows 10 platform.