The current Microsoft strategy when it comes to mobile is still one of retrenchment. Microsoft has pulled back development of the Lumia line, including product cancellations, for presumably a few reasons, including:
Windows 10 Mobile is still being developed and improved
Let OEM partners have some breathing room to create new hardware
Give Microsoft time to come back with a strong product and something to disrupt the market
While Windows 10 Mobile has significantly improved with the latest 10586.164 release aka ‘production build’ the OS still has a way to go before it can be truly competitive in the consumer market. Two major updates – Redstone 1 for summer 2016 (now called the Anniversary Edition) and Redstone 2 for spring 2017 – will bring a lot of polish to the OS as well as new features including deeper integration with Windows 10 for PC.
Microsoft is also encouraging its OEM partners to get on board with Windows 10 Mobile, and Microsoft’s retrenching means the company does not have to compete with those same manufacturers. As it is, the Lumia line still dominates the Windows Phone market with around 97 percent share (AdDuplex, March 2016). Microsoft needs to diversify that market if they want the ecosystem to grow and not be completely propped up by Redmond.
As it is now, there are no new Lumias slated for release by Microsoft to my knowledge. In effect, it looks like the Lumia line is being phased out indefinitely.
Instead, Microsoft appears to want to start its hardware line over again in 2017 when it has a more robust mobile OS and the right, groundbreaking hardware to make a splash. Presumably, that also means ditching Lumia for an all-new brand. However, Microsoft’s exact plans here are currently not known.
In an interesting twist and tying in with the no new Lumias news Microsoft seems to be doubling-down on the concept of a Surface phone. Sources familiar with some of the early plans being discussed for Surface phone have told me that there could be three models planned:
- Prosumer / Enthusiast
No details about what exactly will separate those categories, but they will likely focus on features and various price points. Indeed, variations in processors, internal storage, and other features could be part of the differentiation.
If accurate, this is a modification or, at least, a reinterpretation of Microsoft CEO Satya Nadella’s letter outlining their hardware plans for Windows Phone back in July of 2015:
“We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software. We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love.”
The one substitution is Microsoft appears to be vacating the low-end for a general consumer device. The Surface line has never been about budget-conscious products but instead premium ones, so it makes more sense to realign the phone category too. Adding to that shift is Android, which has surged in the low-end market in 2015 with releases from Huawei and Xiaomi. Those devices have flooded Chinese and emerging markets making competition perhaps too fierce for Microsoft’s ambitions.
Microsoft appears to be vacating the low-end for a general consumer device
Going back to that letter from July 2015, Nadella talks about the long-term of which these Surface Phones appear to be now a part:
“In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly. Our reinvention will be centered on creating mobility of experiences across the entire device family including phones.”
Microsoft giving up on the low-end and budget phone market may not be a bad thing at all. There are plenty of OEMs to pick up the slack including BLU and Alcatel, who have better infrastructure to compete at those price points. It also makes a lot of sense that Microsoft would want to follow the Surface plan to reinvigorate phones just like it did for two-in-one PCs.