A quick glance at Microsoft’s financials is awe-inspiring. The company’s 2016 Annual Report lists revenue at more than $85 billion (a down year, mind you), and a virtual war chest of over $113 billion in cash, cash equivalents, and short-term investments. The deeper you dive, the better the story gets.
That is until you look at recent numbers for its mobile division, where the outlook is less rosy.
Microsoft’s mobile decline surprisingly started with its September 2013 acquisition of Nokia for $7.2 billion. Rather than boost its free standing, Microsoft’s global mobile market share plunged from 2.5% in Q1 2015 to 0.7% a year later, according to The Verge. IDC reports that Microsoft’s smartphone sales dropped more than 32 % in Q3 2016, with little sign of recovery as the company continues to places less effort on attracting the consumer market. These numbers fly in the face of the world’s growing adoption of mobile devices which, according to Comscore, is approaching 2 billion users, and now exceeds desktop computers by almost 200 million devices globally.
Which leads to a few straightforward questions:
- How did a mobile pioneer lose its way so quickly?
- Why can’t Microsoft right the ship despite incredible brain power and almost unique financial resources?
- Shouldn’t market share numbers be pointing in a different direction?
Sure the folks at Redmond see the future and understand the role mobile will play. Traditionally, Microsoft has been an arch-rival of Apple – the two tech behemoths moving in lock step as the world moved from desktop to laptop to the Web and then to mobile. Apple’s brand has exploded due to the success of the iPhone and iPad while Microsoft has become a faint blip on the mobile radar.
But don’t fret Microsoft watchers. The game is far from over. With a few smart initiatives and calculated investments, Microsoft can see a significant market share resurgence.
For starters, here are four concepts for Microsoft to consider right away.
(1) Upgrade Hardware Aesthetics, and Fashion: In the mobile realm it comes down to this: without the right hardware, you’re out. The bad news: Recent video reviews of Lumia models are luewarm at best. The good news? Short mobile device life cycles mean that there’s another chance right around the corner. Microsoft should invest massive R&D budget to really get a feel for Generation Z, and win over the next generation of mobile users with a fun, innovative design concepts. Impress them with battery life, screen resolution, performance, and wireless charging.
Or maybe sponsor a major, big-budget, global design contest with top design firms or leading universities? Ferrari had significant success with this concept with its 2015 Top Design School Contest that led to the introduction of the uber-sleek Manifesto model. There is no doubt that Microsoft can do even better here. Make the promotional budget and prizes significant enough so that no one can ignore participation, and the PR alone behind the contest might be enough to give market share a boost.
(2) Introduce More Software: You’d expect to receive more free software from a Microsoft phone. This can be easily remedied, with the addition of new application packs that offer both utility and fun.
(3) Address the Windows Store Deficit: It’s been argued that the root cause of market share loss is the Windows Store itself. A recent article published by VentureBeat estimates that the Windows store has at least 600,000 fewer apps than Apple’s App Store and Google Play. That’s a significant deficit.
Here Microsoft finds itself in a quandary. With fewer users and declining market share, developers have less incentive to create apps for the platform. And without new and exciting apps, there is even less incentive for consumers to buy Microsoft phones. Accordingly, Microsoft needs to do some immediate work to inspire app development, perhaps starting with something as simple as leveraging the company’s in-house brainpower to create the best utility apps and providing them as a separate download pack.
From there, Microsoft can “extend out,” by making its platform the most enticing place for an outside app developer to create. To help foster creativity, Microsoft can again resort to traditional contest incentives with substantial prize money awarded for the best app designs. Or incentivize top developers with a lower fee structure than iOS or Android (which take 30 percent off the top) for the first five years. What about offering five years of free mobile Azure services for select developers who deploy on the Microsoft platform?
(4) Leverage Marketing Might to Bolster User/Developer Engagement: As the right improvements start to be made, and new apps are introduced, unleash the power of the Microsoft Marketing war chest and engage influencers in innovative, new ways. Be humble, acknowledge the mistakes of recent years, and learn from critics as part of the process. If we’ve learned anything from the world of marketing and pop culture in recent years, it’s that the world loves a good comeback story. Create this story, and tell it as only Microsoft can.
One thing is crystal clear: Microsoft mobile business is salvageable and could emerge as an amazing turnaround story. However, its strategy must be redefined. As app developers ourselves, we’re all rooting for a Microsoft resurgence in this space. We can only hope that executives see the strategic value behind it, and have a willingness to dip into that massive reserve of cash liquidity to make it happen.
Munawar Abadullah is the CEO of the ImpTrax Corporation, a NYC-based IT/Software company that provides full-service IT and network security solutions. You can reach out to him directly at Munawar.Abadullah@ImpTrax.com or learn more about ImpTrax at www.ImpTrax.com.