Windows Phone Getting 'Zuned Out' Of The Market?

In his latest quarterly report on the wireless market, mobile industry analyst Chetan Sharma doesn’t hold much hope for Windows Phone ever becoming a credible challenger to the dominance of the iPhone and Android-based devices in the smartphone market. He suggests the Microsoft platform is on the verge of getting “Zuned out” of the market — a term he coined a couple of years ago describing a phenomenon where a tech player, even a dominant one, gets punished for late entry into the market.

“The fast follower strategy that had served Microsoft so well for a couple of decades is no longer a useful framework for competing. Either one needs to be a “really fast follower” like Samsung (though they did invent the big-screen device segment that Apple is now following) or a trend setter like Apple/Google to have some command of the control points in the ecosystem,” he wrote.

Windows Phone’s share of the U.S. market was down to 1.3% in the second quarter, and only a bit better globally, at 2.75%. Sharma acknowledges that the platform is starting to approach double-digit share in some countries, and calls Windows Phone devices “quite good.” “However, what market is telling us is that despite the blood, sweat, and tears that have been spent over the past few quarters, there is little appetite or need for another platform.”

IDC has a bit more of an optimistic outlook on Windows phone. It projects the platform will end the year with a 3.5% share of the world market, increasing to 6.4% by 2018. 

"Windows Phone continues to slowly build its global footprint, and growth is expected to outpace the market throughout the forecast period,” it stated in a May report.

However, both IDC and Sharma raise a question about what steps Microsoft will take following its acquisition of Nokia this year. The latter describes the current plan as “to continue churning out the Lumia devices at different price points and see what happens.”

Sharma reiterates, however, that problem isn’t with the product, or distribution or marketing, but the timing of Microsoft’s late entry into the market with Windows Phone. In that way, it’s just like June, its failed music player. He suggests Microsoft might be better off “giving up on its device dream and just focus on services on top of the platforms that dominate.”

But with new CEO Satya Nadella laying out a vision for Microsoft as a “mobile-first, cloud-first” company, ditching its smartphone ambitions isn’t likely to be in the cards. But in Microsoft’s second-quarter earnings call with analysts, he also hedged a bit, stating that, “mobility for us goes beyond just devices. While we are certainly focused on building great phones and tablets, we think of mobility more expansively.”

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