Microsoft Acknowledges the Obvious with Their Smartphone Business

Kaput. That’s the best word to describe what is left of Microsoft’s smartphone business in light of today’s announcement that they are pulling back and reducing the workforce in this business area. This comes on the back of an announcement last week that they were selling off their feature phone business.

Microsoft has a long history in mobile, going back to 2004 but it was the release of Windows Mobile in 2008 that demonstrated the strategic intention. It was well thought out and put the user first in terms of features and functions, a departure for Microsoft at the time. Looking back, the fundamental flaw in Microsoft’s strategy was viewing the smartphone as an extension of the desktop experience, and arguably the iPhone worked in this same mode in early generations but with each successive release, it was evident that the desktop was being left behind by Apple. Microsoft never really did.

Microsoft highlighted that they are focusing on business customers, but herein lies the problem. Businesses are increasingly not the buyer as a result of BYOD and dual-use realities.

According to an email sent on March 26 to all employees, Windows and Devices chief Terry Myerson said Microsoft’s phone business, moving forward, will be “more focused” and targeting companies that are most interested in security, manageability and Continuum.

Essentially what Microsoft is saying is that they are bundling Enterprise Mobility Management (EMM) with hardware and an OS. That’s not a strategy but a product aspiration and it’s not likely to happen. Mobile Device Management (MDM) is a market in disarray right now thanks to BYOD and commodization of features into the mobile OS’es. Pricing for MDM has gone to dollars per device from over $100 per device, and it’s entirely probable that it will go to cents per device. There is not “there” there and Microsoft knows it, but what other strategy do they have?

Continuum is another hail mary, a me-too feature against Google Cast and Apple Airplay. This is not something that a growth market makes. It’s a feature that copies what the smartphone duopoly of Android and Apple has made available as a platform feature.

There is one area where Microsoft could find a niche that will keep it in the smartphone game. Hourly workers are subject to an array of regulations that effectively prohibit the use of personal devices. If companies can’t effectively regulate hourly workers on BYOD, then the logical alternative is to provide devices to them with stringent usage guidelines managed by a centralized service.

At any rate, the smartphone market is a duopoly and, ironically, it is dominated by one company that vertically integrates everything in the premium-priced stack while the other is committed to running on everyone’s hardware and targeting price points low-to-high.