Windows Phone's many problems: Should Microsoft give up?

Summary:Microsoft's Windows Phone is in trouble. While HTC and Samsung have fallback plans, so does Nokia. Can Microsoft continue its lead as the third leg in the mobile two-horse race?

Microsoft was resting much of its efforts in Windows Phone on the Nokia Lumia 900, and Nokia's stake in the project was vital to its future smartphone building success.

Described by one colleague as the "only good phone" to come out of the Microsoft--Nokia joint venture, its flagship phone was hit with a critical bug, the Windows Phone marketshare is slipping, and the Windows brand itself is waning in the wake of Apple's success.

Fortune described the Lumia 900 as a "sexy, award-winning smartphone is going on sale Sunday at half the price of the iPhone, and it's launching on a blazing fast 4G network."

"What's the catch?" they asked. "Two things: The phone, called the Lumia 900, is made by Nokia -- and it's running Microsoft's Windows Phone software."

But since its launch, it has already suffered a data cut-off bug which will put off a vast percent of the consumer market, and business customers especially, where data is the lifeblood of mission-critical operations. It's struggling with poor market share and hampered by an image problem in the wake of attention towards iOS and Android rivals.

To apologise for the data bug, Nokia was quick to hand owners $100 in AT&T credit, effectively negating the price of the handset itself.

Despite it being only a software fix, to know that the thought to be tens of thousands who have already bought the device being without data is about as useful as a smartphone with no battery. It's a critical mechanism for any smartphone, and without it, one is left with mostly an expensive paperweight.

But let's say the Lumia 900 is the saving grace to Windows Phone. It could succeed, and it should. But the Microsoft--Nokia team left many wondering if the two had rushed into the smartphone market they were late to in the first place.

Because it's previous attempts to bring out the other Lumia devices, thought of generally to be 'less exciting' than the Lumia 900, a device many were holding out for, Microsoft--Nokia have put all of their eggs in one basket. If the Lumia 900 fails, the joint venture may lose what little market share it has and be forced to start again from scratch.

comScore's figures over the rolling averages for the past three months show that Windows Phone has dropped in market share. Considering how little it had in the first place, it rings bells of bad news:

  • Sep.--Dec. 2011: From 5.6 percent to 4.7 percent --- a drop of --0.9 percent.
  • Oct.--Jan. 2012: From 5.4 percent to 4.4 percent --- a drop of --1.0 percent.
  • Nov.--Feb. 2012: From 5.2 percent to 3.9 percent --- a drop of --1.3 percent.

The figures keep dropping, and currently only sits behind Symbian which holds its ground at 1.5 percent. With so few users, the revenue streams available for application developers is what is turning those developers away from Windows Phone towards iOS or Android.

Apps and games are what make smartphones 'smart'. Microsoft's Windows Marketplace is doing well, but is heavily trailing behind the major players in the two-horse race of iOS and Android.

One is not quick to disparage the growth trajectory of apps in the Windows Marketplace, however. As sister site ZDNet Asia reports:

"...the 50,000 app mark was reached on Dec. 27 last year, the 60,000 mark on Jan. 22, and the 70,000 mark on Feb. 23."

It's a valiant effort, and should the growth continue, it could reach the 100,000 milestone mark by the second quarter.

But compared with half a million apps and games in the Apple App Store and growing by thousands per day, and Google Play --- the new name for the Android Market --- has an approximate 480,000 apps and games from its near half-million mark as of February.

ZDNet Asia adds:

"According to the blog, 67 percent of the apps in the Windows Phone Marketplace are free, 10 percent are paid with a free trial, and 22 percent are paid."

There is no doubt that the Windows Marketplace has at least a foot in the door, but developers will not write apps or games for a platform deemed unsafe or unlikely to generate revenue from a lack of users.

While the Microsoft--Nokia venture does not limit the growth of Windows Phone, as HTC and Samsung both have devices running the Microsoft mobile operating system, but both HTC and Samsung also have their hands in other platform pies, notably Android.

While Nokia holds onto Symbian as its fallback option, Android generates the most revenue while treating Windows Phone as an incubator for potential growth. If it doesn't succeed, the two still have a strong ecosystem they can fall back to.

Nokia has two choices. It can either carry on with Microsoft with the hope that Windows Phone generates an unlikely buzz, or it can focus on its own strategy of reaching out to the wider European and U.S. smartphone market, while at the same time maintaining its growth in the developing regions of the world. Or, it can ditch Windows Phone and jump to Android as the only likely candidate for mobile phone software, or it can carry on with Symbian, which was given a new lease of business life this week, reports ZDNet's Mary Jo Foley.

Microsoft doesn't have much choice. It's either holding a gun to Nokia's head by keeping it technologically hostage, or the two are hoping that their two respective ailing smartphone businesses can somehow join forces and make one ordinary, healthy business.

While two negatives added don't always make a negative, unfortunately two poops just land you with one giant poop.

Image credit: Roger Cheng/CNET.

Related:

Topics: Software, Microsoft, Mobility, Operating Systems, Telcos, Windows

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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