If you've been expecting Microsoft to issue a press
release formally announcing the end of its Windows phone business, you're
probably hoping for a bit too much. But make no mistake: its phone hardware
business is dead.
Some fans, and even some in the media, have
consistently refused to acknowledge this, despite the clear signs in recent
quarters. Now, Microsoft's own figures, and its statements regarding its phone
division, should make it irrefutably clear that there is no life left in its
Windows phone business.
For anyone who's been paying attention, this
shouldn't be a surprise. All of Microsoft's 'latest' Lumia Windows phones are
now well over a year old, with no sign of direct replacements. In many markets,
these devices have been out of stock for weeks - or even months, in some cases.
Meanwhile, the new Windows 10 Mobile Creators Update supports only a handful of
devices, and delivers only a small number of relatively minor improvements,
despite some more significant additions being promised.
During the quarter ending in December, Microsoft's
phone revenue dropped to just $200 million, which included some sales of
feature phones, before the company completed its sale of that business unit to
Foxconn in November. That figure has now dropped to virtually nothing.
According to the company's 10-Q filing to the SEC
for Q3 FY2015, its phone hardware revenue for that quarter totalled $1.397
billion. One year later, in its 10-Q for Q3 FY2016, Microsoft said that phone
revenue had fallen by $662 million, reducing it to $735 million.
As Microsoft published its earnings report for Q3
FY2017, it revealed that its "Phone revenue declined $730 million".
Based on its earlier financial disclosures, that means the company's phone
hardware revenue fell to just $5 million for the entire quarter ending March
31, 2017.
A few days ago, it was pointed out how the latest
version of Microsoft's 10Q document filed with the SEC appeared to call
"time of death" for Windows Phone. In a section of the document
listing current business activities, Windows Phone no longer appeared after it
had showed up in the previous quarter's 10Q. With a microscopic market share
and no new Microsoft branded Lumia phones released since 2015, it has been left
to third party manufacturers like HP and Alcatel to keep Windows 10 Mobile
alive.
In a published interview with MarketPlace, Microsoft
CEO Satya Nardella says that Microsoft will return to the hardware business
when it comes to smartphones. But he added that these would be devices that break
the mold, like the Surface line did. (Hmm, Surface Phone anybody?). The
executive explained that Microsoft is still in the smartphone business with its
iOS and Android apps. And of course, there is that portfolio of Android patents
that brings home the bacon.
When it comes to hardware, Nadella makes it clear
that Microsoft is looking for something new. "So in some sense when you
say will we’ll (sic) make more phones, I’m sure we’ll make more phones, but
they may not look like phones that are there today," the CEO said.
"We make phones today, we have OEMs like HP
making phones and others and we picked a very specific area to focus on which
is management, security, and this one particular feature that we have called
Continuum, which is a phone that can even be a desktop...and at this point,
we’re making sure that all of our software is available on iOS and Android and
it’s first class, and we’re looking for what’s the next change in form and
function. What we’ve done with Surface is a good example. No one before us
thought of 2-in-1s and we created that category and made it a successful
category to the point where there are more 2-in-1s coming. And that’s what we
want to do."-Satya Nadella, CEO, Microsoft.
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