Wednesday, June 04, 2014

Mobile industry experts: answer me this?

Forget what you think you know about me (if anything) and try and give me an answer that you'd give to anyone.

Earlier this week, at Computex, Microsoft announced the first new Windows Phone devices from new manufacturers.
Here's my question though:

Why are (smaller) OEMs signing up to produce new Windows Phone devices?

Here are some of my thoughts on the subject:

Since February Microsoft have announced the names of about a dozen OEMs who have said they are going to start producing Windows Phone devices. Almost all are currently producing Android devices, so why the change?

With Nokia devices making up the vast majority of those in the market, past manufacturers of WP devices stopping production and those that have remained making little effort in the space, what do these new manufacturers see in the platform to make it attractive?

While analysts have not been brilliant at predicting future mobile operating system market share, the broad consensus is that Windows Phone doesn't have a future with a large market share. So why the appeal?

With Microsoft buying Nokia's device business they will now be able to more closely integrate their devices with the OS. They claim that this will be good for all manufacturers but surely this still leaves them in a stronger position than anyone else. Doesn't it?

The Nokia brand name was argued by some to be the biggest thing that Windows Phone had going for it. With that going away, is Windows Phone going to suffer?

Network operators and Microsoft don't have a great history. Whether due to the Skype purchase or other past events, Nokia was believed, by some, to be the redeeming factor for Windows Phone. With Microsoft now owning the Nokia devices division are those old feelings likely to re-emerge and the operators turn against Microsoft again? If they do, or even just that they could, doesn't that make Windows Phone less appealing?

These new manufacturers are [assumed to be] intending to produce "low end" devices. This is where they'll be different from Nokia devices (who have a range of devices) but it's the low end where Nokia devices have numbers. Would Microsoft give up the low end to other manufacturers and focus on the high end--where they have an even smaller relative market share than smart phones as a whole?

Nokia and Microsoft spent billions advertising and marketing Lumia devices. Even then they only managed to achieve a relatively small market share. Can these, mostly, small manufacturers achieve sales without the deep pockets for such promotion?

Has Samsung got Android tied up such that no one else can be successful there? Doesn't Xiaomi prove this needn't be the case for smaller OEMs?

Is it because Microsoft have removed the license fee, for devices with a screen smaller than 9 inches running Windows, that now makes it more appealing? In theory this is now cheaper than paying for/licensing the patents that Microsoft owns and are part of Android. Is this price difference enough to make manufacturers change OS? Or could Microsoft be dropping Android patent licensing requests if the manufacturers are also building Windows Phone devices?

Is this just a way for OEMs targeting certain markets (primarily India & China) to differentiate within those, highly competitive, markets? If that's the case, is a different OS that is perceived to still suffer from an "app gap" able to provide an appealing alternative to iPhones or devices running android?

I'm not stupid and I've spent 10+ years trying to learn all that I can about the mobile industry (and developing websites and apps for mobile devices). Something just doesn't quite add up for me. Am I missing something obvious?

Your thoughts?


  1. Removing the license fee helps (and the patent thing may well apply too), but I think the Qualcomm reference designs make a bigger difference as it lower the cost to producing a Windows Phone. It also means you need to sell less of them to break even and then make a profit. As a result it will be possible for these small OEMs to do relatively small production runs, sometimes with just a single customer (i.e. one operator in mind).

    I think you're right about wanting to differentiate in a competitive market, especially as it's going to be a relatively small additive cost to also do a Windows Phone version of a particular Android handset.

    Further, the very lack of competition in the Windows Phone space is attractive to some of these OEMs. Yes, the addressable market is much smaller, but this is balanced by the fact you're only competing really competing against Nokia/Microsoft it's easier than Android, which is cut throat.

    Operators are still keen on Windows Phone because they don't want to see an Android monopoly at the lower end of the market. Why? Because they think they will loose influence / control (and they're probably right).

  2. I'm far from an expert in anything and certainly not this end of the market, but you asked, so here's my 2 cents of rampant speculation:

    - Zero license cost and patent protection from Microsoft offers appealing enough cost reduction to try.

    - MS is courting these players with easier access to official app stores / support through certification process. They've decided to take some quicker wins in the areas that WP does she promise instead of continually hammering away at the hight end.

    - Manufacturers want to spread the risk of over-reliance on Android.

    As I said - all speculation - I can offer little evidence to support this. Would love to know too.

  3. I think it's a couple of reasons.

    1) MNOs are very wary of only having two main suppliers of phones - Samsung and Apple. They need more players in the game to help their negotiations. Windows Phone is a good 3rd platform to bet on. Well, better than BlackBerry at any rate...

    So, MNOs encourage WP adoption from manufacturers - big and small.

    2) I think (some of) the smaller manufacturers feel like Windows is a "proper" OS and that Microsoft is a "proper" company. Now - rather than being ignored by Google, they can get into a business relationship which will propel them into the stratosphere.

    (All this is speculation - I don't have any insider knowledge. Views don't represent my employer.)


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