Microsoft's Windows Phone Hits a Wall

For a while there, Microsoft (NASDAQ: MSFT  ) was putting up respectable growth in content availability in its Windows Phone platform. Tech giants like to wield app counts as selling points for their respective operating systems, coaxing users in with the promise of useful apps.

By December 2011, the software giant was up to 50,000 apps, which promptly doubled over the next six months to 100,000. That total would proceed to climb to 120,000 by October 2012. Now, seven months since the last count, Microsoft has inched higher to 145,000 total apps in its repository. That's marked deceleration even as Microsoft has been aggressively trying to win over developers.

The company disclosed that tidbit alongside a blog post announcing Nokia's (NYSE: NOK  ) new Lumia 928 that launches on Verizon (NYSE: VZ  ) Wireless this week. The three-way partnership is a win/win/win for everyone involved. Microsoft and Nokia both get increased exposure to the largest mobile subscriber base in the U.S., while Verizon is not so secretly rooting for underdog platforms like Windows Phone in the hopes that competition will reduce subsidy expenses.

Both Apple (NASDAQ: AAPL  ) and Google (NASDAQ: GOOGL  ) now boast roughly 800,000 apps each in their respective App Store and Google Play storefronts. It's entirely true that a lot of those apps offer duplicate functionality (flashlight apps) or are low quality (fart apps), but it's also true that many of those offerings can't be found on other platforms because indie-developers and start-ups always target the bigger platforms first.

The high-profile names like Angry Birds or Netflix will be mostly given as table stakes. That's not the point. What's important is that the real third-party app innovations that drive platforms forward will always start on iOS and/or Android. The next Summly, Sparrow, Mailbox, or Temple Run won't start off on Windows Phone. Indeed, Temple Run was just released for Windows Phone 8 in March; the popular title made by a small husband-and-wife developer team initially launched only on iOS and then expanded to Android shortly thereafter.

Innovative start-ups will go for iOS and Android first, and only expand to other platforms if they're not acquired first. That's the real reason why app counts still matter in the admitted presence of so much junk. It's no longer just about getting the big names on board, even though that's also necessary. It's about appealing to the little guys.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


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  • Report this Comment On May 13, 2013, at 10:56 PM, Seppo2 wrote:

    Except that Windows Phone Store already has 80% of the top 25 free and paid apps that are available in the Apple App Store:

    http://bit.ly/11H4Ykj

    In other words, they 'quality' of WP apps very close to Apple or Android apps, but the quantity is (understandably due to WP smartphone's current ~5% market share) not there yet.

    I for one have all the apps I need on my Lumia 920.

  • Report this Comment On May 14, 2013, at 9:14 AM, wcinvest wrote:

    Windows phone is simply a significantly superior OS IMHO then Android or even IOS. Given that the Microsoft platform already has most of the good apps, I'd recommend the platform to most people right now unless they want a specific phone on a different platform such as the iPhone or HTC One.

    Microsoft has got this one right. I haven't been as impressed with an Operating System since the Original Macintosh, Windows 95 and the original iPhone/iPod Touch.

    Windows 8/Metro I do think needs to be tweaked a bit on non touch screen desktops which MIcrosoft will be doing for Windows 8.1 in a couple of months but it works absolutely brilliantly for Windows phone. Apple/Android both need to copy Microsoft ASAP since Windows 8 Mobile OS is simply significantly superior. And this coming from someone who owns a Macbook Air, has owned about 7 different Apple computers throughout the years, has owned an Iphone, an Android phone and has strong background in computer science.

    Purchased through the Google store, the Nexus 4 is probably the best midrange price phone for the features but I decided to go with a cheaper Windows phone instead simply because the OS is superior and in my case that advantage is more important then the availability of some stupid applications that I will rarely use. I was also put off by the inability to add memory to the Google phone. Microsoft does a phenomenal job in providing simply access to how I naturally want to use the phone.

    For folks who want to tweak their phone to death, Android is probably the way to go but for folks who want a phone OS that is a joy to use, Windows Phone 8 right now is the best game in town and its not that close.

  • Report this Comment On May 14, 2013, at 10:37 AM, dhugos wrote:

    Motley Fool ought to be the first to recognize that Windows 8 Phone is going to take some patience. In the same way that MF preaches that the steady growth of an index fund is a far superior approach to investing than looking for some hit-it-big stock, Windows Phone 8 is a similar story.

    Who knows, maybe it won't work out. But all indications are that Nokia has no intention of giving up on this effort, nor do any of the other carriers and vendors. Verizon is conspicuous in this regard with the Lumia 928, along with T-Mobile with the prepaid Lumia 521, and, on the opposite end, its remarkable Lumia 925.

    What's so great about Windows 8 phone? It's something that MS clearly got right for one thing. Another is that it's a totally different approach to the design of mobile phone interfaces. There's a reason that Siri said Windows Phone was the best-designed (and that was Windows 7) mobile OS before Cupertino quickly put a stop to it.

    While there are no sure things in investing and mobile phones, I think it's at least reasonable to gamble that within a year or two Windows 8 will have achieved steady growth and market share, and that the app count will go up accordingly.

    The apps that they do have are quite elegant compared to their iOS and Android counterparts. WP8 does offer the most-used apps that used to be just the domain of Android and iOS. I personally don't think the situation warrants characterizing MS's situation as "hitting a wall."

  • Report this Comment On May 14, 2013, at 10:51 AM, jordanwi wrote:

    Yep, all the MSFT investors bought their shiny Lumina, and Balmer bought Jessica Alba one, and now I guess that's pretty much all the customers.

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