One of the barriers that has always faced Microsoft in the mobile operating system world has been its hefty licensing fees, especially when set against free Android. Benefits such as IPR protection and guaranteed quality have rarely been enough to attract OEMs away from open source, especially when they are targeting low cost devices. Now Microsoft, which is going through a radical rethink of its mobile strategies, is said to be slashing the cost of Windows Phone licences for selected partners, and encouraging OEMs, notably HTC, to install its OS alongside Android.
If confirmed, this approach looks more desperate than bold, and the timing is very odd. Getting WP8 onto a high profile device like an HTC One, rather than the second-string products to which it is consigned by all but Nokia, scores clear points. But users purchase smartphones for the preferred user experience, and often for the wealth of apps, so it seems unlikely that they would buy an Android phone and then turn on Windows.
And reducing the cost for OEMs to support Windows Phone is far too late. That needed to come at the stage when Microsoft was seeding the market, not when it is acquiring the handset business of the only dedicated and significant WP8 device provider, Nokia. That deal sparked speculation that Microsoft would seek to increase its own control of mobile devices running Windows Phone and Windows RT, as it sought to create an integrated hardware/software offering, Apple-style, under its Surface brand and its new ‘One Microsoft’ turnaround plan.
That would seem to point to the software giant going even further down its established Windows Phone route of working with a few favored partners, and imposing strict design guidelines, rather than opening up an Android-like free-for-all (even supposing that would ever have happened around mobile Windows). Pushing WP8 out cheaply, and to devices whose user experience has been designed for another OS, would contradict the aim of creating a superior mobile platform entirely driven and controlled by Microsoft itself (hence the Nokia purchase).
Whether Microsoft is actually the company best fitted to create such a platform is highly doubtful, but that is another issue. At least Windows Phone is starting to gain some ground, even if its RT cousin (with which it is likely to converge over time) is still struggling. According to new estimates from Kantar WorldPanel ComTech, Windows Phone grew its market share in all five main European markets in the three months to August 31,almost doubling its share compared to the same period a year before ‘ though it has not yet hit double figures. It has 9.2%, says Kantar, averaged across the UK, France, Germany, Spain and Italy. Android is miles ahead with 70% while iOS has 16%, with both major OSs up about two percentage points on the previous year.
This suggests that most of Microsoft’s gain is at the expense of BlackBerry and the dying Symbian. These leaps have been strong in selected markets ‘ up 4.5% in the UK and 3.8% in Germany. In the former, it now has a total of 12% of the market, the first time it has achieved double figures in any major economy, while in the latter it is only only one percentage point behind iOS.
The question is whether Microsoft can build on a momentum that has been achieved almost single-handedly by Nokia, with its push into the midmarket (often against Microsoft’s high end and enterprise instincts and platform plans) and its focus on top quality imaging and mapping functions. “Windows Phone’s latest wave of growth is being driven by Nokia’s expansion into the low and midrange market with the Lumia 520 and 620 handsets,’ commented Dominic Sunnebo, strategic insight director at Kantar.
Perhaps this is the motivation for Microsoft’s apparent overtures to HTC and others, to flesh out the midmarket while it focuses Surface on the high end. According to sources quoted by Bloomberg, Terry Myerson, head of Microsoft’s operating systems unit, asked HTC last month to load Windows Phone as a second option on Android handsets in return for a reduction, or elimination, of the licence fee. HTC is the longest standing mobile Windows OEM and is itself struggling to reverse market share declines in the Android space.
These two old friends might look like a partnership of failures, but there is certainly logic for Microsoft to cultivate OEMs with strong designs ‘ like the Android HTC One ‘ in order to extend its reach. And outgoing CEO Steve Ballmer is said to have held meetings with other handset makers during a recent trip to Beijing, to reassure them that Microsoft still wants to work with them, despite the Nokia deal and the high profile statements about building its own Surface platform. This is the difficult balancing act that Google has also had to pull off, keeping partners sweet in order to expand the market for Android, even while acquiring Motorola Mobility and pushing its own Nexus brand. There were some early signs that Microsoft may be handling it well ‘ ZTE very publicly stated its commitment to continue to support WP8 last week, echoing early words from Huawei.