Niche phone maker, fewer devices, small market share

Jul 9, 2015 12:35 GMT  ·  By

The time for tough changes has come. As the company CEO Satya Nadella announced a few weeks back, Microsoft started a new restructuring process that’s supposed to help the Redmond-based software giant cut costs and improve its efficiency in the mobile industry, where it’s still lagging behind its rivals Android and iOS, despite the millions of dollars invested in research, development, software, and devices.

It’s a well-known fact that Microsoft struggled to make Windows Phone successful, and pretty much every single update or new feature was announced with much fanfare, so it’s no surprise that so many people are disappointed to see the company make significant changes to the platform.

But what Satya Nadella is trying to do right now is actually fix some of the mistakes that his predecessor made at the helm of the company.

Company insiders revealed that Steve Ballmer, the former Microsoft CEO who retired in 2014, was the main supporter of Nokia’s acquisition, despite the fact that Bill Gates himself reportedly opposed to the deal. Some sources claimed that Ballmer was ready to quit if the deal didn’t go through, so Bill Gates, who was and still is one of Ballmer’s best friends, changed his mind and agreed to the acquisition.

With all the changes that Microsoft is making these days, it’s pretty clear what would have happened if Nadella had been in charge of the software giant two years ago, when the Nokia deal was agreed, but time is running out for Microsoft, and the company needs to act fast. And more effectively than ever.

Getting out of the mobile business is not an option, no matter what analysts and some journalists say. Mobile devices and an operating system for smartphones are needed for the existing tech climate, so Microsoft can’t simply exit this market. Not with so many people already using its products, and certainly not during a time when it struggles to become relevant beyond Windows.

Leaving the mobile market is not an option for Microsoft.

So to make sure that Windows Phone survives, but without burning cash every day, the company has resorted to a different strategy. One that’s strikingly similar to BlackBerry’s.

The Canadian phone manufacturer has never been a rival to Android and iOS, and despite the fact that many predicted its demise, BlackBerry always survived. Many suggested that BlackBerry was involved in takeover talks with one company or another, but these negotiations, if they ever existed, never went through.

BlackBerry still survives these days and it does it in a way that allows the company to carefully think out every single move that it does in a market that barely has anything to do with Android and iOS.

An Android rival that doesn’t compete with Android

Basically, BlackBerry is the kind of niche mobile player that, although that it competes against Android and iOS, is not afraid of its small market share. It has loyal buyers and everyone knows that. Ask any BlackBerry owner out there: the OS is so good and their devices are fantastic, so the next phone they’ll buy is most likely the next BlackBerry.

That’s what Microsoft is trying to do with Windows 10 Mobile and Lumia devices. Instead of flooding the market with devices of all kinds, Microsoft is trying to become a niche player that’s not worried about its small market share. The 3 percent that it has is more than double the market share of BlackBerry, and still, the Softies have always struggled to get more. To no avail, that is. And suddenly, having such a small market share is perfectly fine. BlackBerry is doing fine, so why wouldn’t Microsoft do the same thing?

BlackBerry is the niche phone maker that Microsoft must become.

Microsoft launched no less than 7 devices in the last 8 months, which means that it released almost one device every month. That’s enormous for a company that has just a 3 percent global market share, and it’s no wonder that it’s losing money.

But the new Microsoft will do things slightly differently. Microsoft will focus on just three different categories, namely value phones for those who don’t want to spend too much money on a smartphone, business phones, and flagships for fans.

Company insiders claim that the company wants to launch one or two devices as part of each of these categories every year, so we could get a maximum of six new phones every year.

Right now, BlackBerry has exactly six phone models on the market, namely Passport, Classic, Leap, P’9983, Z30, and P’9982. And although it’s mostly business, BlackBerry is more or less targeting the same categories as Microsoft: Leap is the more affordable device that allows anyone who wants a BlackBerry to buy one without spending a fortune, while Passport is the best you can get right now from the Canadian manufacturer.

Having fewer devices on the market that don’t require a huge amount of money from the moment you start their development to the one they reach end of life seems to be the better choice for niche players such as BlackBerry, and that’s what Microsoft is trying to do right now. BlackBerry has been doing it for years, and there’s no doubt that Microsoft can do it too.

And because a closed operating system might not have any chance to succeed, especially with a small market share (it’s really hard to convince developers to bring apps on your platform since only few people use it), BlackBerry has added support for Android apps in its OS. And now Microsoft is planning to do the same, but with a twist: devs will have to manually port their apps to Windows 10 Mobile before publishing them in the stores.

Needless to say, it remains to be seen how many developers would actually be interested in doing that, but if it doesn’t work, don’t be too surprised if Microsoft changes that too and goes the BlackBerry way to allow all Android apps to be used on its devices.

In the end, Microsoft’s Windows Phone and Lumia reorganization is not at all a bad thing. It’s something that had to be made, and without Satya Nadella, Windows Phone might not have a future in Microsoft’s lineup. Nadella might be the best thing that happened to Microsoft this decade.