When discussing mobile operating systems, the conversation tends to center on the market-share leaders: Google's Android and Apple's iOS. That is mostly understandable, as Google and Apple commanded a massive 96.3% of worldwide smartphone unit shipments in 2014, according to IDC. The market continues to move toward a true duopoly, as the combined market share was up from 93.8% in 2013.
The other operating systems cited by name in IDC's quarterly mobile-phone market surveys are Microsoft's (NASDAQ:MSFT) Windows Phone and Canadian vendor BlackBerry. Both lost market share last year in the face of competition from Google and Apple, IDC reported. The bottom particularly fell out of BlackBerry's business as units shipped fell an amazing 70% on a year-over-year basis -- from 19.2 million units in 2013 to 5.8 million in 2014, dropping its worldwide market share from 1.9% to 0.4%.
While Microsoft's performance wasn't as poor, it left much to be desired. The company increased unit shipments by 4.2%, from 33.5 million in 2013 to 34.9 million in 2014, but lost market share because its growth fell far below the total market's growth rate of 27.6%. For Microsoft, getting smartphone vendors on board with the operating system should lead to more supply and choice -- hopefully leading to OS growth. So let's take a gander at what's ahead for the company.
Welcome back, LG
On Blogging Windows, the company announced last week it would partner with LG for a new unit -- the LG Lancet. For Windows, this welcomes a vendor back into the fold. Re/code reported LG helped bring the first-generation Windows Phone 7 to market, releasing the LG Optimus 7 and the LG Quantum on the operating system. By the time Microsoft rolled out Windows Phone 8, however, LG no longer made a phone for the OS.
Although LG will remain an Android-dependent manufacturer, this is good news for those rooting for Microsoft's Windows Phone growth. Most notably was an LG representative's comment concerning the new rollout: "We've always taken the position that we were open to doing more Windows phones, but we were letting market demand guide us."
As for the unit itself, the features and specifications are nothing special, but they are decent for an entry-level model. The phone costs $120 -- or $5 monthly on Verizon's Edge payment system -- and boasts a 4.5-inch display, 1.2 Ghz quad-core processor, rear and front cameras, and 8GB of storage. Perhaps the phone's biggest differentiation features are Advanced Calling, an HD-quality voice call with other Verizon subscribers, along with Windows Phone 8.1 features such as Cortana.
Is LG's strategy flawed?
However, I question the marketing and sales strategy for this unit. First, LG is only selling the unit in the United States, and it appears to be an exclusive-carrier model. The United States is increasingly becoming a premium-handset market, with top-level vendors Apple and Samsung commanding nearly 71% of total subscribers. The U.S. low-end smartphone market is a tough one, with high and slowing mobile penetration rates on one end and many subscribers opting for flagship and premium models on the other.
Addressing this strategy, the LG representative also commented, "[h]ere and now, we're focusing on the U.S. market with our latest Windows device, but we're keeping a close eye on other countries and regions for opportunities." For its price point and features, this unit appears to be a solid device for developing markets -- not for the highly developed U.S. market. And while we don't know how the Lancet will sell, it's safe to assume it won't be a game changer. That said, it's a positive sign for Microsoft that more vendors are seeing the opportunity in Windows Phone.