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To Grow Windows Phone, Microsoft Needs to Copy Samsung

The latest market share and phone shipment numbers from research firm IDC don't show a promising future for Microsoft's (NASDAQ: MSFT  ) Windows Phone platform.

It the second quarter, Microsoft's smartphone shipments dropped to 7.4 million units from 8.2 million in the same period of 2013. At the same time, the Windows Phone global market share fell from 3.4% to to 2.5%.

To overcome this, Microsoft appears bent on tackling the low-end market, which makes some sense but could prove problematic. Microsoft should take a page out of Samsung's (NASDAQOTH: SSNLF  ) playbook instead and hit all price points fast and hard.

The $99 off-contract Lumia 530. Source: Nokia.

Taking the low road, again
In an letter to employees last month, Microsoft devices and services chief Stephen Elop said, "In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia."

Microsoft launched the new $99 off-contract Lumia 530 this month in India, and will bring the phone to the U.K. market next month. The company is trying to repeat the success it has had with the phone's predecessor, the Lumia 520. That device garnered 10% market share in some parts of Europe and makes up 30% of all Windows Phones sales.

But there's no guarantee the 530 can replicate the 520's success, especially with -- as IDC noted -- the low-end market cooling toward Windows Phone.

This is where Microsoft needs to take the broad approach Samsung has taken for its handset business.

Just see what sticks
Samsung has long been praised --and chided -- for its shotgun style of product releases. High-end devices like the Galaxy S5 and Note 3 are some of the best in the world, but the South Korean company taps into the low-end market as well with its Galaxy Young and Galaxy Core lines. The devices hit nearly every spectrum of size, quality, and price.

Samsung's Galaxy S5. Source: Samsung.

Overall, that strategy has helped push Samsung to the No. 1 vendor spot, even if it means dropping phones that don't sell well or having a bad quarter here and there, like it did in the second quarter of this year.

Oddly enough, Nokia's device business -- which Microsoft just bought -- had the exact opposite of Samsung's strategy for quite a while. Dan Rowinski, former editor for ReadWrite, wrote in 2012: "In many ways, Nokia is the direct inverse of Samsung. Where Samsung can develop and deploy a long list of devices in a short time, Nokia is sluggish."

Microsoft was notably sluggish in mobile for a while too, but now that it owns Nokia's devices and services unit, the company can finally move forward at its own speed. The question of its handset success rests on whether it can introduce devices to market fast enough to create real momentum.

That's no easy task. It's not as if Microsoft can launch a new high-end phone and expect consumers to open their wallets (just ask Amazon). But flooding the market with many devices in a myriad of price ranges would be a good place to start. It's not a perfect strategy, but it's better than targeting just the low end -- which seemingly is Microsoft's only strategy right now.

Microsoft will eventually run out of time with its handsets if it can't turn this around. No mobile platform can stay between 2% to 3% market share and be a success. If Windows Phone and the Lumia line are to succeed, it's going to take an all-out blitz on the handset market. Anything else will leave Windows Phone where BlackBerry is today -- minus all the good years on top.

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  • Report this Comment On August 25, 2014, at 10:15 PM, AMRooke wrote:

    Many of us who were early adopters of WP have been concerned at the recent dearth of flagship caliber devices. MS had planned the release of the McLaren flagship from Nokia this fall/winter, but the entire phone was scrapped when MS decided to hold back on the 3D Gestures technology (wasn't mature enough yet). This left them without a hand sized flagship since the Lumia 1020 (my family and I have 920s, which were the initial flagships, still performing much better than most of my friends newer, high spec'ed Android devices).

    The Lumia Icon/930 was marketed as a flagship device, but it was released with a low cost display, which prevents it from running the Glance functionality, which was a deal killer for me (no flagship device should ever go backwards in functionality / performance). They urgently need to come out with a flagship!!!

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Chris Neiger

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage.

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