Can More Cheap Windows Phones Save Microsoft's Mobile Plans?

When it was first released in April 2013, the Nokia Lumia 520 was the best-selling Windows Phone device in the world. A lot has happened in the 15 months since then, including Microsoft (NASDAQ: MSFT  ) purchasing Nokia's mobile business. One thing that hasn't changed, though, is that the Lumia 520 is still the best-selling Windows Phone device in the world.

The Lumia 520 has had over 12 million activations to date, and according to data from AdDuplex makes up 31.6% of the Windows Phone ecosystem worldwide as of June 2014. On a country-by-country basis the Lumia 520 has been beaten twice: once by the Lumia 521 (which is largely the same phone, redesigned slightly for T-Mobile) in the United States, and once by the Lumia 920 in China. While Windows Phone still holds minimal global market share (only around 2% as of June 2014, according to NetMarketShare), the success of the Lumia 520 within that share may influence Microsoft's plans for the platform going forward.

The premium market
There have been several premium Windows Phone models released by Nokia and other manufacturers, but none have had the impact of the Lumia 520. Part of the reason is that its low price made it appealing in emerging economies, and its inclusion on AT&T's GoPhone service opened it up to low-income and contract-averse customers in the United States. Just because Windows Phone has been more popular at lower price points doesn't mean that the premium market has been abandoned, however.

Unfortunately, it is exceedingly unlikely that Windows Phone will make much headway in the premium market. Apple's iPhone and devices running Google's Android OS such as Samsung's Galaxy line control the high-end sector. The Lumia 1020, for example, a premium Windows Phone offering that boasts a 41-megapixel camera, typically makes up only 3%-5% of the Windows Phone handsets in any region. Given the low percentage of overall market share that Windows Phone holds, premium Windows Phone handsets make up only a small percentage of a small percentage of the smartphone market.

The low-end market
If Windows Phone is going to enjoy any market share gains, it will come in the form of low-end handsets such as the Lumia 520. To capitalize on this, Microsoft is releasing the Lumia 635 to both subscribers and GoPhone users. The GoPhone release will even feature limited-time promotional pricing to encourage early adoption. The company is obviously hoping to repeat the success of the Lumia 520, encouraging both upgrades to the newer handset and potentially winning over new smartphone users with the device.

This may not be effective in bringing about significant increases in market share, however, especially as Windows Phone isn't the only competitor in the low-end market. Android devices hold the majority of market share here as well, and it is unlikely that Microsoft will be able to steal much if any share in the near term.

Does Windows Phone have a chance?
Even though it is unlikely that Microsoft will be able to claim much if any share in either the premium or low-end markets in the near term, this doesn't mean that all hope is lost for the company. Microsoft's OS could settle into the third place position behind iOS and Android, solidifying its user base to fend off smaller players in the smartphone market. Over time this could lead to increases in market share, though realistically this won't result in Windows Phone becoming a threat to Apple or Google.

Instead, Microsoft's best chance is to try and focus on smaller market share gains that will put more distance between it and other small players such as BlackBerry. While this won't equate to the market domination that the company has long enjoyed in the PC market, Microsoft needs to take what victories it can get instead of trying to take the top prize.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 23, 2014, at 8:00 AM, tjc206 wrote:

    No but a high end surface phone with those newly acquired patents and windows 9 could

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3040071, ~/Articles/ArticleHandler.aspx, 10/22/2014 10:43:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement