As Microsoft gears up for the Windows 10 release for later this month, the company is slimming down. It is cutting its workforce by 7,800 and writing down the Nokia devices and services acquisition. There is one important question enterprises should ask. How critical is the mobile channel for Microsoft?
Microsoft is returning to its core competency. This means selling down some of its mapping business and advertising unit to AOL.
On the mobile side, Microsoft’s write-down and job reduction does not mean it is giving up in the smart phone business. When the segment is outgrowing the PC market, it makes sense that Microsoft continues innovating mobile solutions. It is highly unlikely that Microsoft will take market share from Apple’s iPhone and Google’s Android, but it may still grow market share overall. The company may focus successfully on the low-end market. Last month, it launched a Lumia 540 in Malaysia and Kenya.
The enterprise market is still open, too. The firm is already growing its cloud presence, developing Azure and Office 365 cloud software offering. Demand is so strong that the company is raising prices for those services.
Operating System is agnostic
Microsoft’s key strategy in staying relevant in mobile is supporting iOS and Android apps on Windows 10 mobile. The strategy is similar to that of BlackBerry. When BlackBerry realized BYOD would need MDM software supporting all mobile OSs, it made its BES 12 software capable of managing Apple and Android devices securely.
Microsoft’s cost cutting might relate to hardware. In much the same way BlackBerry offset hardware development risks to a third-party, Microsoft likely scaled down its hardware supply chain. This will lower costs and better match output to product demand.
Microsoft’s Windows Phone OS is still strategically important. The company wants content and services available across all channels – Xbox, PC, mobile, cloud – the WP10 phone should extend support for that need.
It will take several years before Microsoft’s market share in the mobile space reaches significance, but the company has the size, time, and the resources to play the long game. The Surface tablet is another illustration of Microsoft differentiating itself from the other mobile operating systems. Yet, the operating system still gives user connectivity to Microsoft cloud services.
Learning from the past
When Microsoft first started the Windows Phone on WP7, it was already behind. Microsoft based the WP7 operating system on Windows CE, which means multi-core CPUs were not supported. It was not until WP8 was released by Microsoft that there was better processor support. Phablets and devices with bigger displays still needed an update for WP8 first.
With WP10 and beyond, there is hope that Microsoft finds better success for all things running on the OS. If the reception for the desktop is better, it would only help WP10.
Mobile is still a critical piece in Microsoft’s business. If more hardware firms come on board, developing for Surface tablets and Windows Phone, this would accelerate adoption for the Windows platform. In the future, a WP10 phone built by Samsung or LG is not impossible.
