At the top of the mobile Christmas tree sit Apple and Samsung.
Apple eats the huge majority of the entire industry’s profits. Around 90% according to some metrics.
Samsung’s wide range of premium and mid-range devices see it generate huge sales, but nowhere near as much profit.
Between them, they consume a huge amount of the industry’s production resources. That includes screens, processor foundries, valuable RAM, and even the factory workers dedicated to building them.
Further down the tree are struggling older brands, Sony, BlackBerry, LG, HTC and others. All of these players have seen their market share collapse, their brands become a brief highlight reel as buyers rapidly moved onto other devices.
Then, coming up from the bottom are rising Chinese stars like Xiaomi, Huawei, ZTE and Micromax. They started in their homeland with low-end devices, but are now rapidly moving up the chain with better devices and international ambitions.
Microsoft in Mobile
Somewhere in among this shifting landscape sits Microsoft, with a damaged brand due to years of missteps and poor timing, leaving a legacy that puts it among the also-rans. Whatever its fans say.
The company’s late-to-market new Lumia products are me-too in the hardware stakes, and considered boring in design terms. That leaves them with little space on phone sellers shelves and despite the buzz, relatively little interest in a saturated market.
While Windows 10 is a big hit in the compatibility-focused and connected-obsessed enterprise, most mobile users seem nonplussed. Which leaves the company between a rock and a hard place when it comes to what to do next.
Recovery is Improbable, Not Impossible
That’s the landscape Microsoft faces in 2016, and whatever it does, no matter how much it spends, it faces a tricky situation.
Microsoft could give its expensive hardware away, costing it billions, and its market share would rise a couple of points. It could give low-end Lumia hardware away in cereal packets and not fare much better.
In America, Microsoft can sell its expensive hardware to business executives and a small but significant band of loyalists. That seems to be its current focus with the new Lumia 650 due February and looking ideal for middle-management fodder.
Outside its home borders, Microsoft needs to look at the local grass roots, taking the route Chinese brands find success with. They all started with modest devices and worked their way up the Android quality and pricing ladder.
Each has built locally popular Android devices that have helped created brands, almost out of nothing. Improved hardware and distinct online services has created a buzz, and online sales through portals have worked around lack of interest from stores.
Microsoft already has the modest hardware in the form of the Lumia 550, and it has plenty of online services.
Microsoft could decide to invest more money in India, Indonesia, China, Brazil and other booming territories. Giving services away for free, and selling the phones at cost, or getting local telcos to subsidize the price, then it could see market share growth.
As for America and other western markets, perhaps there is no solution. Apart from feeding enterprises, creatives and business users with as much hardware as they can afford.
Unless the company has an almighty hardware hardware trick up its sleeve, better than curved phones, sapphire glass and double-screens put together, it is hard to see much changing over here.
Under the Surface Phone
The one glimmer of hope is the much rumored Surface Phone. With CES and Mobile World Congress early in 2016, Microsoft could make a massive impact as the other vendors announce their mid-cycle upgrades.
With the interest in Surface Pro 4 and Surface Book, Microsoft has a proven winner, apparently outselling the iPad at launch. If it can cram the same level of power, with an Intel chip, into a phone, then the press will be lapping it up.
Something Microsoft needs for 2016 is new online services. That will stop reps having to drone on about Office, Skype and OneDrive at every press conference. Perhaps a hefty investment in mobile gaming, something that Apple has failed with in Game Center and on Apple TV, will get the buyers more interested.
Mobile Xbox gaming could attract a wider range of users and perhaps move Xbox One users off their Android companions. The company has seen the huge interest around retro gaming. So, why not code in an emulator for original Xbox games, or a streaming service like Sony’s PlayStation Now to bring Xbox 360 titles to the smaller screen.
Release a smaller Xbox controller making it ideal for portable use, and Microsoft could challenge Sony and Nintendo’s struggling western portable gaming efforts.
As mentioned, none of this is easy to do, all of it very costly. However, Microsoft’s resurgent share price, its success on the desktop in Windows 10 and the apparent floundering of Apple and Samsung gives it this one year of opportunity to bring something new and different to the table.
Apple’s struggles to innovate, and its focus on a smaller phone (the rumored iPhone 7C) to reengage in emerging markets suggests this is where the future battle could be won.
While at home, Microsoft can trump Apple in gaming, and perhaps reconsider its pull out of Xbox Studios to produce unique content for its media services to drive further interest.
Where do you think Microsoft will succeed and fail in 2016 when it comes to mobile. We’d be interested to hear your thoughts and opinions on where the battle will be won, lost and if 2017 will be too late.