Given the recent growing trend of the smartphone, recent Apple Inc. reports show data indicating that shipments of Apple smartphones exceeded shipments of client computers and tablet computers combined reflects the current state of the smartphone industry with companies developing smartphone platforms such as Android and iOS, most notably. While iOS became the “leading smartphone and client PC vendor in Q4 2011”, an interesting competitor has been in the back of most techie’s minds since CES 2012 last month- Microsoft.
The company’s platform has not captured the heart of consumers as rival Android and iOS platforms have done, leaving the Windows Phone at a 1.6% share in the worldwide smart phone market, down 14% from the previous year, but according to an article by Ewan Spence, a contributor at Forbes, gives a prediction about how Microsoft will try to establish itself in this market during 2012.
Pairing itself with Nokia, Microsoft aims to insert itself in the middle of the current smartphone war, primarily targeting Google and Apple by pushing for the development of its products’ technological capabilities, as well as the Marketplace to go along with it. The interesting part of Microsoft’s strategy aside from its product development is its price point- Microsoft may be allowing AT&T to price the newly revealed Nokia Lumio 900 phone at $99 with a two year contract.
The low price effectively undercuts comparable phones from Samsung and Apple by about $100, and certainly undercutting the RIM Blackberry, which lag behind in both performance and price point. Armed with a strategy highly reminiscent of Amazon’s Kindle Fire pricing strategy, this shows that Microsoft is willing to take the almost $250 million loss- which is nothing in comparison to the $50 billion that it has in cash- in order to allow itself to gain market share. However, to achieve this, Microsoft needs to build up the environment that the Windows Phone will inhabit. In some areas such as the Enterprise platform, Microsoft is poised to replace RIM in that range with its key resources in that area.
However, the most important consideration is indicated in the last line of the article that “the challenge for the Windows Phone is not for one department, but for the whole company.” Looking at Microsoft’s strategy as a dynamic process, Microsoft needs to foster competitive advantages over time. However, in a smart phone market already saturated with well-established platforms, this will be difficult to achieve. Microsoft has a history of being able to capture the interest of a large segment of consumers with its Windows client computer operating system line, but with products such as the Zune and Zune Marketplace, Microsoft has not been nearly as successful. It is clear that in order to succeed in this venture, Microsoft needs to focus on the purpose behind pursuing this product line and then put this purpose into practice, but the difficult lies in defining how this purpose ties into Microsoft’s current strategy.
In my opinion, Microsoft has the potential and available resources to pursue this strategy. However, they need to focus on developing their differentiating factor with the Windows Phone. It is easy to try to find ways to imitate or draw inspiration from existing products, but since Microsoft operates in an inherently different way, I feel that they need to also reflect this in the way they develop, promote, and implement their product and its associated infrastructure.
In closing, what do you guys think? Will Microsoft be successful in growing its presence in the smartphone market, and how will this tie into Microsoft’s core business values and purpose?
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