Microsoft is still paying for its mobile mistakes 10 years later

CEO Satya Nadella attracted attention this week when he confessed that Microsoft's decision to kill its mobile platform almost a decade ago was a strategic mistake. But someone's hallucinating here.
Written by Ed Bott, Senior Contributing Editor
Satya Nadella
Bloomberg/Contributor/Getty Images

Mathias Döpfner, the CEO of German publishing giant Axel Springer, sat down recently with Microsoft CEO Satya Nadella for what the company called a "wide-ranging interview". It was nothing of the kind. A billionaire CEO (Döpfner) lobbed one softball question after another to the billionaire CEO (Nadella) of a trillion-dollar company (Microsoft).

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And then he didn't ask a single follow-up question.

Consider, for example, this exchange, which you can find in the transcript published on Business Insider:

Is there any kind of real strategic mistake or just wrong decision that you regret in retrospect?

The decision I think a lot of people talk about – and one of the most difficult decisions I made when I became CEO – was our exit of what I'll call the mobile phone as defined then. In retrospect, I think there could have been ways we could have made it work by perhaps reinventing the category of computing between PCs, tablets, and phones.

I can think of a dozen follow-up questions I would have asked at that point:

  • What do you mean by "reinventing the category of computing between PCs, tablets, and phones"? Can you elaborate?
  • How would that have made the Windows Phone ecosystem viable?
  • You talk about "the mobile phone as defined then", referring to when you became CEO in 2014. Can you define how the modern mobile device is different from that one?
  • Do you understand exactly how many angry Windows Phone fans are going to send you email messages demanding that you revive that product line?

I'm serious about that last question. Windows Phone fans are nothing if not... well, let's say passionate, and this latest round of rehashing Microsoft's failed attempt to create a viable mobile platform is only going to reawaken them.

Anyway, this confession is a shift on the part of Nadella, who defended the exit decision in his 2017 book Hit Refresh. In that ghostwritten volume, he noted that Microsoft in 2013 was "desperate to catch up after missing the rise of mobile technology." As a member of Steve Ballmer's management team, he had voted against Microsoft's acquisition of Nokia. The deal went through anyway:

I voted no. While I respected Steve and understood the logic of growing our market share to build a credible third ecosystem, I did not get why the world needed the third ecosystem in phones, unless we changed the rules.


A few months after I became CEO, the Nokia deal closed, and our teams worked hard to relaunch Windows Phone with new devices and a new operating system that came with new experiences. But it was too late to regain the ground we had lost. We were chasing our competitors' taillights. Months later, I would have to announce a total write-off of the acquisition as well as plans to eliminate nearly eighteen thousand jobs….

That seems like the right take, frankly. Carving out a third ecosystem in phones turned out to be impossible, primarily because most developers didn't see the need to invest resources outside of the two dominant ecosystems, iPhone and Android. There was no combination of incentives or even outright bribes that was going to change that.

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Nor can I think of any sort of "reinvention" that would have breathed life back into the Windows Phone platform. It sucks to be the third platform. Just ask the people running Google's cloud business, which is in a distant third behind Amazon's AWS and Microsoft's Azure, and not showing any signs of gaining ground.

Nadella's team has had some success in expanding its Office franchise to mobile devices, but on both iOS and Android it's clearly playing on platforms it doesn't control. That means paying rent to Apple and Google, and being forced to fight an uphill battle against the well-entrenched platform owners, who are able to set their own apps and services as defaults.

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Microsoft has struggled to carve out a niche in the Android ecosystem, releasing the dual-screen Surface Duo to decidedly mixed reviews (I returned mine). An upgraded device didn't fare much better, and the line appears to be dead, or at least pining for the fjords.

It's possible, with some effort, to turn a stock Android phone into something that could be called a Microsoft phone. The Microsoft Launcher, with its emphasis on Microsoft 365 services, replaces the Google-centric default launcher. The Edge browser is a solid replacement for Chrome, and the Phone Link app on Android does a creditable job of tying the phone and a Windows PC together in ways that vaguely resemble the features that tie iPhones and Macs together so well.

Microsoft doesn't brag about its use of any of these apps on Android devices, which is a pretty clear sign that the percentage is tiny. And there's not much the company can do to force those numbers up. After all, defaults are powerful things.

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I'm doubtful that Microsoft plans to expand its mobile hardware platform in 2024 or 2025, and recent developments in the Surface division, including the loss of the division's longtime boss, Panos Panay, support that conclusion. In that same interview with Mathias Döpfner, Nadella made it pretty clear that the company is concentrating its bets on AI-related projects.

Given Microsoft's push to add AI features into its existing search engine, I figured maybe I could ask Bing to take a crack at one of those follow-up questions:

Please answer the following question from the perspective of Satya Nadella. What do you mean by "reinventing the category of computing between PCs, tablets, and phones"? Can you elaborate?

According to several web sources, by "reinventing the category of computing between PCs, tablets, and phones", Satya Nadella means that Microsoft could have created a new kind of device that would combine the best features of all three platforms and offer a unique user experience. He regrets that Microsoft exited the mobile phone business too soon and missed the opportunity to innovate in this space.

A new kind of device? Sounds interesting. But my guess is that Bing is hallucinating. As is anyone who expects to see Windows Phone come back to life in the AI era.

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