By Shira Ovide And Thomas Gryta
Microsoft Corp. has a new fix-it plan for the company's
smartphone business: Wait a little longer.
Microsoft's $9.4 billion purchase last year of Nokia Corp.'s
mobile-phone business was billed as a way of reviving Windows
Phone, the company's four-year-old smartphone system. So far, it
hasn't been working.
The share of smartphones shipped last year that were Windows
Phone devices slipped to 2.7%, from 3.3% in 2013, according to
research firm IDC. The company of late has mostly released budget
phones, a sector where growth is promising but competition is
fierce. Many popular mobile apps aren't offered on Windows Phone,
or are subpar compared with versions for iPhone and Android
devices.
At this week's Mobile World Congress in Barcelona, an annual
trade show for the mobile, telecom and tech industries, Microsoft
unveiled some midrange phones. But the company is mostly talking up
its coming Windows 10 operating system, which will power its next
generation of devices.
Meanwhile, sales of Apple Inc.'s iPhone continue to soar, and
the major Android device makers like Samsung Electronics Co. and
HTC Corp. are unveiling their own flashy flagship devices running
on the Google Inc. operating system.
Stephen Elop, the former chief executive of Nokia who now
oversees Microsoft's devices group, says Microsoft is comfortable
waiting. The pause in rolling out new, high-end devices is part of
a planned strategy, and doesn't reflect any internal development
issues, he said in an interview in Barcelona. He promises a new
flagship Windows phone will be on sale by year-end.
"It is a conscious decision to launch into the flagship tier
with Windows 10 and new flagship devices," he said.
Microsoft critics say the company is stuck in no-man's-land,
between Apple's high-end smartphones and Android-powered devices
manufacturers are cranking out in a wide range of choices.
Microsoft officials, however, say the company is playing the
long game and banking on Windows 10, which it says it will release
sometime later this year. The operating system will for the first
time use a common software backbone for Windows personal computers,
phones and tablets.
The idea is to attract people who are already users of Windows
and its popular office software on their computers. Microsoft is
betting they will find it helpful to use a Windows Phone, in tandem
with their PC. It will also theoretically be easier for developers
to make applications that work seamlessly on all Windows
devices.
"Microsoft's roots are in productivity, helping you achieve
something, helping you get something done," Mr. Elop said. The
software unification under Windows 10 will instantly increase the
number of devices that will feed off the same software, he said,
something that should encourage more developers to write software
for a platform that will reach hundreds of millions of devices.
"Windows Phones previously, as the challenging ecosystem, had a
smaller number of devices out there," Mr. Elop said. Company
officials say Microsoft has the patience, skills and financial
firepower to make Windows Phone work this time.
The benefit of Windows 10 across a user's devices might make
sense in business settings, said J.P. Gownder, a Forrester Research
analyst. Microsoft also has talked about sophisticated security for
Windows smartphones that should be especially appealing for
corporations worried about their employees roaming around with
vulnerable company secrets in their pockets. With Windows 10,
"there could be a different argument to make," Mr. Gownder
said.
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