Some thoughts on Microsoft failure to capture the hardware mobile market

Microsoft has struggled to stay in the mobile market and they had hoped that Nokia would have turned around their fortunes. Unfortunately, what they failed to see that they were actually competing in two very distinct markets and they wanted to capture both at the same time.

Most of us have heard the unfortunate news that Microsoft is letting go of almost three thousand employees who work on their mobile department. Most notably, all those employees were from Nokia and was a culmination of the very sour acquisition of the company by Microsoft back in 2014.

http://www.businessinsider.com/microsoft-closes-nokia-acquisition-2014-4

The point I am trying to make is that their hardware business that they had acquired from Nokia turned out to be a complete failure. There are a few lessons we can all take away from this deal and venture that Microsoft tried to go after. In hindsight, we can always argue our point that the deal was going to be sour in the first place. After all Nokia had lost a significant market share as a result of its bad judgement over such rivals such as Android and Apple. Many would argue that Nokia had the makings of retooling and reinventing in order to take the mights of the other rivals. Here is the first lesson to learn from this market but first a quick history lesson. We know that Apple took the world by the storm with its first iPhone and it hasn’t looked back ever since. It just announced that it had sold its billionth smartphone and that is a huge accomplishment. Around that time we heard Google enter into this market with an Android operating system powering smartphones. It seemed nothing at that time, but look where it is now, is has overtaken the mighty Apple in its ubiquitous use of the Android operating system and is found in tablets as well as smartphones. So history repeats itself where Microsoft enters this market as late as usual. But we have seen how Microsoft can come up the ranks, so the world accepted a third helping of the mobile operating system.

One would think that the market would easily accommodate three of the biggest players known to mankind, however as Microsoft found out, that was not to be the case. Firstly, the reason why Microsoft fell on the wayside is because when it comes to top smartphones we need to separate out the hardware from the software. So in actual fact, we are talking about two entirely different market places one is the hardware for smartphones and the other is the mobile operating system that powers the smartphones. Only when we take this into context can then we truly appreciate what went wrong with Microsoft.

Here are the top three players for the smartphone (hardware) market share:

  • Samsung
  • Apple
  • Huawei

Note that the top two of these players have the Android operating system

Now for the top smartphone OS (software) market share:

  • Android
  • Apple
  • Microsoft mobile

Clearly, you can see where the trouble lies. We have Microsoft competing in both the market places which is an exceptionally tall order. On the hardware side of things Microsoft naturally pares its mobile software with the Nokia hardware and it is trying to fight two battles. Clearly, Microsoft has made an error of judgement in attempting to capture both markets at the same time. Even with the clout and money of Microsoft, they simply could not pull it off.

Here is the correct approach if Microsoft wanted to survive in these two domains.

Microsoft should have realized these two very distinct market domains that they were competing in. Had they realized this, they would have plugged Android to their Nokia acquisition and started selling this into the open market. Naturally, this did not fit in with their normal vision of world domination and particularly their marriage with their own in-house mobile software that they have been struggling for years to get off the ground. So what did they do, they made the worst business decision to date – marry two fledgling businesses together! Did they not know any better.

As I said, the best thing they could have done was separate out the two business entities to serve the two market domains. Had they packaged Nokia with the Android OS, I am pretty sure that they would be somewhere in the top 3 of the hardware market if not the top 5. Think how innovative Nokia was with their hardware functionality but was a failure with their own Symbian operating system.

Now had MS went about like this on the hardware side, they would have captured a significant market share in the hardware space. Although, MS wanted to promote its own mobile operating system, it went about it the wrong way. In actual fact, the approach I mentioned above would have led them to expand their mobile applications. I am not saying that their mobile OS should have been ditched, but they could have done much more with it like they are doing in the enterprise market.

Microsoft owns a distinctive tagline which many people do know better late than never.

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