(The Guardian) Since their launch in 2010 73m Windows Phones have been sold. A small drop in the ocean of 2.88bn smartphones sold globally, but Microsoft’s software has a bright future in at least one market segment: the low end.
So says Dan Dery, vice president of Alcatel, the Chinese mobile device manufacturer formed from a buyout of a joint venture with France’s Alcatel-Lucent, and which specialises in smartphones costing under $200. That’s well below the worldwide average selling price (ASP) for smartphones, which IDC reckons will be $314 this year, down from $335 in 2013.
“Carriers from across the world have consistently told us that entry-level Windows Phones work, but not at the high end,” Dery explained to the Guardian.
Apart from Microsoft’s mobile arm (which used to be Nokia’s), there have been Windows Phones models released this year by HTC, Samsung, Huawei and Alcatel, with more on the way.
But it’s not the high-end flagships such as the Nokia Lumia 930 or the 41-megapixel Lumia 1020 that make up the big sales. Instead, it’s the entry-level Nokia Lumia 520 and similar models which have been the biggest hit with customers: Ad Duplex’s September 2014 figures show that the 520 and 521 make up 35% of the installed base.
Windows Phone’s biggest strength is that it performs the same on low-power smartphones as it does on high-end devices. It makes entry-level smartphones costing less than $200 a solid, polished experience, but diminishes the attraction of more expensive Windows Phones.
By contrast most low-end Android devices struggle to perform well, requiring much more powerful hardware to run smoothly, which can frustrate users with cheaper devices.
‘A very good consumer experience at the entry level’
Low-end Windows Phones have sold well, undercutting the competition on price but with solid feature sets that get the basics right – a similar tactic to Motorola’s popular Moto E and Moto G Android smartphones costing under £120.
“We don’t know whether that’s because Windows Phone is very good for entry level smartphones, or because people have been looking to get a Nokia device at an affordable price,” said Dery.
Nokia was not the first Windows Phone licencees when the software arrived in October 2010, but quickly became the biggest when Stephen Elop, then chief executive, adopted it wholesale to replace the ageing Symbian software. Microsoft bought Nokia’s mobile phone division inSeptember 2013 for €5.4bn, acquiring the Lumia smartphone brand but not the Nokia name. The Nokia brand remained with the Finnish parent, which continues to make network devices and mapping products.
The purchase was seen from the outside as a move that could put off other Windows Phone device manufacturers, which will from now on be directly competing with Microsoft while licensing its operating system for their own phones.
However, that’s not the case as far as Alcatel is concerned.
“Now we’ve seen Microsoft buy Nokia but put the [Nokia] brand aside, which means either Microsoft did its own maths and saw Windows Phone working at the entry level not tied to the Nokia brand – which is our belief – or it misread the numbers and it’s gotten rid of Nokia meaning someone else will have to come in and fill the gap,” said Dery.
“We’re not interested in high-end devices – so Windows Phone producing a very, very good consumer experience at the entry level, which is not the case for other software, is a very interesting prospect,” he said. “It seems a lot more natural for first-time smartphone users – it’s surprising and I don’t know why, but that seems to be the case reported from carriers.”
‘The most converged OS’
With Microsoft’s vision of Windows 10, unveiled at the end of September, Windows Phone suddenly looks more appealing, Dery says..
“Windows is the most converged OS between smartphone, tablet and laptop to date,” explained Dery. “We are very happy to have a partner interested in conversion, because our users do not want complicated systems – they want something familiar from their work environment in the office, but on a smartphone.”
Not only is Windows 10 a fuller realisation of a “one Windows” for all devices, but PC manufactures may soon see even more competition, this time from a different breed of device manufacturers.
‘Not good news for companies from the PC industry’
“Windows 10’s cross-device integration – from smartphone through to PCs – will help us make an entry into mobile computing, but with a different mindset taken from the mobile business not the computer business,” explained Dery. “It’s very good news for people with our background, but not good news for companies from the PC industry, because it will likely increase the pressure as more players from our side of the industry enter the computer market.”
The PC market has been shrinking for years, as tablets and other mobile devices have been bought in preference of desktop and laptop computers. Figures from both IDC and Gartner show shipments shrinking approximately 1% year-on-year, creating a squeeze on smaller players outside the largest six - Lenovo, HP, Dell, Asus, Acer and Apple – who have seen their share over the overall market increase.
Toshiba, Sony and Samsung have recently withdrawn wholly or in part from the PC market.
Alcatel has Windows Phones available, and has done since Windows Phone 7 was first released, but it is actively looking with things in the pipeline based around Windows 10 moving towards the traditional PC industry.
“The whole electronics industry has been trying for users to deliver the PC experience onto smaller devices,” said Dery. “But now we’re seeing something interesting as mobile devices are capable of going the other way from mobile to computers.”
“The simple fact that Microsoft brings Office to multiple platforms is very good news for us, for example,” he said.
It is unlikely Windows 10 will be enough to re-energise the PC market, although the re-introduction of the Start button and classic Start menu will please business customers who were put off by the radical changes made in Windows 8.
But Windows 10 could see new devices entering the PC market from the mobile industry. Convertible laptops, which can be used as either a laptop or a tablet, have seen solid uptake by both consumers and business according to data from Gartner.
Alcatel and other mobile manufacturers out of China and the far east could soon be putting the squeeze onto PC manufacturers coming at the business from a different angle, and they should be worried according to analysts.
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