Windows Phone 7 d0med

[Chris Nahr]

Microsoft Watch updates WP7 domedness meter with NPD data.

Research firm NPD Group just released some smartphone market-share numbers for the fourth quarter of 2010, and at first glance their data's enough to send even the most stalwart Microsoft executive screaming for the hills: Windows Phone 7's share hits 2 percent, dead-even with Palm's WebOS but lagging Windows Mobile (4 percent), Research In Motion's BlackBerry franchise (19 percent), Apple's iOS (19 percent) and current market-leader Android (53 percent).

However, Kolakowski thinks WP7 adoption is merely slow rather than catastrophic:

Windows Phone 7 devices made their U.S. debut Nov. 8, once the quarter was already underway, and continues to be unavailable on Verizon and Sprint. That would hobble any new platform's market-share, even without Apple's iOS and Google Android sucking all the oxygen out of the proverbial room. Plus, despite its creaky nature, Windows Mobile remains a legacy player among a not-insubstantial subset of businesses--a presence that, like Windows Vista, could take some time to fully dwindle to nothing.

If anything, the NPD Group data simply confirms the obvious: Windows Phone 7 is not a breakout hit. For months ahead of the platform's release, Microsoft executives had been prepping for that eventuality, telling anyone who would listen that Windows Phone 7 was a long-term project unlikely to beat Android or iOS anytime soon.

[StGabe]

I mean, once again, 25-50% of Android or iPhone sales right out of the gate? Are you absolutely, positively, insane?

No, and I gave you an example, upthread, of a similar product that did nearly exactly this. The PSP launched into a market that was completely dominated by another product and immediately picked up and maintained about half the sales of their competitor. 25-50% of iPhone or Android is only a few % of the total phone market in the US/Europe. It's not like I'm saying that WP7 has to catch up in total handsets out there overnight, just that they have to make a noticeable dent in iPhone/Android day-to-day sales and they're clearly not doing that.

What are you expecting to magically happen that will make the WP7 start upticking on market share? Branding isn't that important in this market if you're not Apple. Look at how most people are calling Android phones Droids. The phone specs are locked down (a good thing, btw) so it's not possible for their major technical improvements anytime soon. There's unlikely to be any earth shaking change in the next year that causes a significant uptick in WP7 sales. The best they can hope for is that one of the carriers of phone manufacturers hits on a particularly successful marketing campaign for one of the phones but at this point I think the market is pretty full for that and it still would only be incremental on a, currently, pretty much non-existent market presence.

[LMN8R]

The video game handheld market is vastly different from the phone market though. Outside of all the periphery stuff like how few alternatives there are, how rarely new handhelds are released compared to phones, the monthly fees that go along with them, etc. there's the fact that they also sell a whole lot less.

The PSP only needed to sell a couple million to a market with only a single alternative to take a significant amount of market share.

Android is not just a few percent of the total phone market in US/Europe anymore. Android is completely dominating everything, even Apple, and Apple too is also dominating everything else except for Android. 25-50% is a tremendously inachievable goal right at the outset.

Heck, Android didn't get to 25-50% of the iPhone until well more than a year after it came out. Now the market is even more competitive, even more difficult to enter, and you're claiming that it should be reasonable for a brand new competitor to do even better than what Android did? That is simply an unreasonable goal.


Now, when do I expect WP7 to pick up faster? I have no idea. I think word of mouth will help since, according to Microsoft, people are highly likely to recommend them. If they ever get around to releasing significant updates, that could help too. There's also a rumor that Nokia has some phone event in February, and Nokia's new CEO is Microsoft's old Office president - maybe some WP7 link there that will increase adoption.

I honestly don't think it'll ever get up to where the iPhone and Android are now, but a solid 3rd place? Maybe after a year or two, maybe even never. The only thing I'm disputing now is the hyperbole proclaiming death unreasonably after only 2-3 months on the market.

[StGabe]

The video game handheld market is vastly different from the phone market though. Outside of all the periphery stuff like how few alternatives there are, how rarely new handhelds are released compared to phones, the monthly fees that go along with them, etc. there's the fact that they also sell a whole lot less.

Mostly moot/incorrect. If we buy the number's we're seeing, the PSP sold about as many devices in 2 days after launching in the US than the Windows Phone has sold worldwide. The monthly fees are irrelevant as the mobile market is all about contracts those actually drive a much faster churn than in handheld gaming (the DS/PSP lasted for about 6 years whereas most consumers change out phones on something closer to the 2 year contract cycle).

Android is not just a few percent of the total phone market in US/Europe anymore. Android is completely dominating everything, even Apple, and Apple too is also dominating everything else except for Android. 25-50% is a tremendously inachievable goal right at the outset.

You're not really factually correct here either. Android and iPhone are still pretty close and neither is "dominating". The smart phone market is still smaller than the non-smart phone market. 25% of Android sales would be somewhere in the neighborhood 5% of total phone sales depending on what market you're talking about.

Heck, Android didn't get to 25-50% of the iPhone until well more than a year after it came out. Now the market is even more competitive, even more difficult to enter, and you're claiming that it should be reasonable for a brand new competitor to do even better than what Android did? That is simply an unreasonable goal.

Already addressed this. The market is actually far easier to enter right now than it was when Android came out simply because a much larger %'age of phone buyers have already owned or are interested in a smart phone.

I think word of mouth will help since, according to Microsoft, people are highly likely to recommend them.

I'm tired of talking to a viral marketer. Have a good day.

[LMN8R]

You asked a question, I answered it honestly, you pay attention only to the small part of my post that fits your overall narrative. Nice.


I really don't understand why you're trying to compare Windows Phone 7 to the launch of the PSP instead of the launch of Android. It's one of the silliest comparisons I've ever seen in this entire conversation.

It's just mindboggling that you're expecting people to pick up Windows Phone 7 multiple times faster than they picked up Android, despite how much more competitive it is now, and when that ridiculous expectation isn't met, you proclaim failure.

[markv]

LMN8R is right in regards to the comparison of phones to the hand held video game market. There are something like 2 billion+ cell phone users in the world, and used for day to day things that a lot of people consider a necessity. The handheld gaming market could only dream of having that much market penetration, and gamers are a fickle bunch who will switch to new and fancy things on a whim and have that kind of disposable income, where as much of the cell phone market does not.

The comparison LMN8R makes to how Android entered the market is what you should be looking at. StGabe you're saying that it's easier to penetrate the market with already 3 SOLID providers for smartphones and really it's not.

Things going against WP7 being a runaway success at launch are as follows:

Contracts - People don't like penalties for breaking them or paying full price for phones. I've a lot of single friends who have oodles of disposable income that absolutely refuse to pay full price for a phone and are waiting until their contracts lapse to re-examine the market. These are the people prime to make changes all the time and they're hesitant due to the stiff fees. They tend to do 2 year contracts and never 3 so they can swap out as soon as possible if something new is out. Short of their phone breaking there is absolutely no way they are going to look at upgrading unless it offers something absolutely ground breaking.

Competition - There are already 3 very prominent players in the smartphone market.

Blackberry holding a huge chunk of the business platform that Microsoft failed to capitalize on with WM5/6.x.

iPhone bringing something new and diverse to the masses in a way that was appealing to the consumer. They offer a nice interface, convenient way to get apps, standardization, integration with other media devices for ease of use (aka iTunes for music xfering etc).

Android brings it to the techy market with open standards and the Google nerd factor. Nice marketplace, lots of open source development which the IT crowd tends to love.

WM5/6.x/Windows stigma - As much as it sucks to say this, Microsoft is fighting themselves on this for completely dropping the ball when they had the change years ago to push things properly in the smartphone market with their mobile OS. They made mistake after mistake when it came to WM6.x and delay after delay. This is going to cost them a lot when trying to re-enter the market with WP7.

WP7 being rolled out so late is really the final part of it all. It should have been out 6 months to a year sooner than it was, but Microsoft, for some reason, has been slow to the game when it comes to things like this. They're hoping their name will help carry some weight and maybe it will in the business community, but not in the consumer market.

I'm sure they expected slow inroads, and LMN8R is right in stating that if you think anyone would think it would be a runaway success you're a bit off there. Android took a long time to get rolling due to the fact that most people were content with their iPhone and already locked in to contracts. Once their contracts were up, though, you saw people starting to check out a more matured Android OS to see what it was like and started telling their friends about it and the ball got rolling there.

I hope WP7 does decently, and I don't expect it to be 1st or 2nd, but I would like to see it push RIM out of the business market, which MS has a chance to do if they swing things right by doing some good integration with business platforms. We all know MS is huge in the business market, so catering to that crowd is probably the way they should go in my books.

[StGabe]

There are something like 2 billion+ cell phone users in the world, and used for day to day things that a lot of people consider a necessity

So what you're saying is that the inability of the WP7 to even match a handheld gaming device's launch sales is particularly damning?

Contracts - People don't like penalties for breaking them or paying full price for phones. I've a lot of single friends who have oodles of disposable income that absolutely refuse to pay full price for a phone and are waiting until their contracts lapse to re-examine the market. These are the people prime to make changes all the time and they're hesitant due to the stiff fees. They tend to do 2 year contracts and never 3 so they can swap out as soon as possible if something new is out. Short of their phone breaking there is absolutely no way they are going to look at upgrading unless it offers something absolutely ground breaking.

Contracts create a 2 year cycle of people looking for new phones. They don't have the affect you think they do. There are millions of people buying phones every day and if Windows Phones were more compelling and/or had MS's marketing and launch campaign been more successful then many of them would be buying them.

Competition - There are already 3 very prominent players in the smartphone market.

You and LMN8R both talk about the market being competitive without any real understanding or explanation of what that supposedly means. The market isn't "competitive" in a traditional sense of a market that is at saturation with no room for growth. The market is growing, extremely quickly. Android's and iPhone's overall market shares (not just shares relative to each other) are both increasing at a good clip. The market wide open for a new smart phone, more so today than ever before, simply because there are so many more people looking for smart phones.

Blackberry holding a huge chunk of the business platform ... iPhone bringing something new and diverse to the masses ... Android brings it to the techy market with open standards

Now you're talking about features. And yes, a significant problem for WP7 is that it isn't really competitive on features with other phones. That's what I've been saying all along. There isn't a good enough reason for someone to pick a WP7 over an iPhone or an Android, MS failed to create the illusion of a compelling reason with their marketing, and that's why it isn't making a dent in the sales of other smart phones.

Android took a long time to get rolling due to the fact that most people were content with their iPhone and already locked in to contracts.

As stated above, contracts are irrelevant. Android actually started out pretty decent but it took a while to warm up to it's current success, not because of iPhone competition (the iPhone wasn't even available on many carriers that supported Android at launch), but because the market was still very young and growing. That is no longer the case and WP7 doesn't have that same excuse.

[LMN8R]

Do you think Android failing to meet 25-50% of iPhone's market share any time during its first year (let alone first 2-3 months) is damning?

If not, why not, when it apparently is for Windows Phone 7?

You realize that the market "being very young and growing" is actually a benefit for Android, not a detriment, right? The fact that Android was introduced in a "very young and growing" market made it far easier for them than what the market is today for Windows Phone 7. I'm not sure why you're considering that a hurdle for Android to get over.

[StGabe]

If not, why not, when it apparently is for Windows Phone 7?

Read my prior posts and find out!

I'm not sure why you're considering that a hurdle for Android to get over.

Because it is. You can't sell phones to buyers who don't exist yet. Those buyers exist. Now. Today. Hundreds of thousands of them buying smart phones each day. And the number of them is increasingly dramatically.

The most important "brand" here was the concept of the modern smart phone and consumers are now sold. Some of them care about iPhone/Android for very specific reasons ("Apple is hip and cool" / "Google is open and cool") but most of them just want to be able to do all that cool shit that they saw their friend do on their phone and they're not really sure why I correct them when they call Android phones Droids. There's no reason those guys wouldn't be interested in and buying WP7's if there was a compelling reason to do so. The core problem: there isn't one.

[LMN8R]

It seems like that market already existed long, very very very long before Android ever came along. The iPhone created that market, solidified that market. Before Android existed, practically everyone and their mother knew what the iPhone was, wanted an iPhone, just to be able to do all the cool shit they saw their iPhone friends doing.

You're trying to act like that market didn't exist before Android, when I'd argue that market was already there, people just didn't want to switch to (or stay on) AT&T to get access to it. With that in mind, it seems like Android had a tremendous thing going for it right from the outset - a phone that's as powerful as the iPhone, is as cool as the iPhone, but it's not the iPhone, and it's on the network you already subscribe to.


It is not now an easy market that is easy for anyone to enter. With two tremendously powerful players already there, it'll take an extremely long time for a third to be recognized (if ever. It wasn't easy for Android to enter for more than a year, even though they weren't exclusive to AT&T, even though there were a huge number of devices. Android had every advantage on its side, to exploit the market created by Apple, and it still took more than a year to take off. It is not easier now for Microsoft than it was for Google when Android was introduced.

[StGabe]

It seems like that market already existed long, very very very long before Android ever came along.

I'm sure it might seem that way to someone who doesn't know what the hell they are talking about.

For example, you keep saying that Android had such a bad launch. The market was a fraction of it's current size back then (iPhone sales, for example, have nearly tripled since then) and yet the G1, a single Android phone, did quite well and easily outsold the WP7 in it's first month by a large margin (at 1.5m presales). In comparison the iPhone sold about 4m the first quarter of 2009. So that was easily a significant fraction of iPhone's total sales. And that's one phone.

But wait, that should have taken them years to do ... I mean the market is so hard and ... blah, blah, blah. News flash: it has been just over 2 years since Android launched at all. WP7 is languishing with no significant new releases coming up and little hope for it to significantly improve sales this year. I know you've probably got stock options and all but ... it's not looking good.

[mono]

If MS actually releases their long overdue huge patches for WP7 this quarter, and the phone is also pushed to other carriers, I think it can pick up a bit of steam. MS isn't showing much agility in the early going though, and that's a bad sign considering how far behind they are in the mind share department. Still, I have to keep coming back to it, the UI beats iOS and Android pretty easily. It'll be a shame if MS botches the long game with such glacial patching and refinements.

The Zune software also needs a lot of work. A pet peeve of mine, but you can't sort podcasts by date, or create playlists of recent podcasts. Zune, sadly is a freaking shadow of iTunes, and that's saying something considering how long in the tooth iTunes is these days.

[LMN8R]

I'm sure it might seem that way to someone who doesn't know what the hell they are talking about.

For example, you keep saying that Android had such a bad launch. The market was a fraction of it's current size back then (iPhone sales, for example, have nearly tripled since then) and yet the G1, a single Android phone, did quite well and easily outsold the WP7 in it's first month by a large margin (at 1.5m presales). In comparison the iPhone sold about 4m the first quarter of 2009. So that was easily a significant fraction of iPhone's total sales. And that's one phone.

But wait, that should have taken them years to do ... I mean the market is so hard and ... blah, blah, blah. News flash: it has been just over 2 years since Android launched at all. WP7 is languishing with no significant new releases coming up and little hope for it to significantly improve sales this year. I know you've probably got stock options and all but ... it's not looking good.

Considering that T-Mobile announced 1 million sold in the US roughly 6 months after launch, I think it's pretty safe to say that the 1.5 million preorders didn't end up amounting to anywhere close to 1.5 million sales right at launch. Even if it's a US vs. rest of the world thing, that gap is just tremendous.

http://www.informationweek.com/blog/...RSKHWATMY32JVN

Is it possible for you to have a conversation without personally insulting people or questioning their personal investment and/or ties to a product? I'd say I've been perfectly civil throughout this entire discussion, and nothing I've said warrants such outright hostility from you. I have no "stock options" or personal investment in any of this. I'm simply trying to make fair comparisons here.

[StGabe]

And yet still competitive with WP7, two years later! (the number discrepancy is possibly due to the fact that those numbers are for TMobile US only)

Other interesting factoids.

Android launched with very few apps, and low quality ones at that. WP7 launched with a ton of professional apps that MS spent many pretty pennies subsidizing.

Android took a long time to get out to all the markets (it took about 6 months to roll out to maybe a dozen countries) and WP7 is already available in something like 30 countries (with the store available in 17 or so?).

Android launched with one phone and didn't get a second one out for over 6 months. WP7 has 10 out already. It was over a year before there were that many Android phones.

At the time both Android and the iPhone were hard-pressed by the old guard of smartphones, you know, all those Nokias and Blackberries. Both Nokia and Blackberry had huge brand presence (for the mobile market) back then. (they're still doing ok although they've faded a lot since then).

...

The story you're telling is pure spin. Are you just hoping that if you repeat it enough times it will come true? The biggest differences between Android and WP7 are that Android launched with a much more compelling feature set for it's market but had a much softer launch and took much of a year to really get going. Once it did, it did great. WP7 is already where Android was a year down the road on many important metrics ... but it's not seeing the sales and it's unlikely that will change any time soon.

[StGabe]

I'd say I've been perfectly civil throughout this entire discussion ...

Hmm??

In this thread you've cussed at me, called me mindboggling, ridiculous and irrationally hateful, among other things. Reality check time.

[LMN8R]

See? Those are the types of points that I was hoping you'd bring up a long time ago instead of making silly comparisons to the PSP. Those are some compelling arguments and points that I hadn't thought of before, and you're making a good case here.

I still think it's too early to tell only 3 months in, and disagree that sales so far can be considered "lackluster" when it's been such a short time. But we'll see how things go for the rest of the year.

[Hiredgoons]

WP7 lost out to Windows Mobile in the last quarter. Link. If you go to the actual NPD report, it says that WP7's market share was 2% vs. Window's Mobile market share 4%. Ouch.

I know WP7 didn't get the benefit of being available for the entire last quarter. Still. You're supposed to beat a cadaver in an election, and Windows Mobile is definitely room temperature.

[ThomasR]

How does Nokia make out in all of this?

[Mark Weston]

How does Nokia make out in all of this?

Haha, well yes. If anyone is "d0med" here it's Nokia. After all this is their core business; Microsoft could drop out of the mobile phone business today, lose a tiny chuck of their overall sales and probably increase their overall margins.

Nokia committed suicide in the Western smartphone market and now is getting killed all over the developing world by cheaper Asian competitors. Those Asian competitors are also starting to arrive in the West with smartphones which will compete on price and probably kill off the midrange "Feature phone" market. Will Nokia be strong in any market segment in a couple of years' time?

[RepoMan]

Elop will soon announce Nokia getting into bed with Microsoft and moving the whole company to Windows Phone 7. My guess, anyway, Elop being an ex-MSFT guy and all.

[DennyA]

See, RepoMan, those kinds of guesses are dangerous to make, since you were right! :)

Future Nokia Smartphones will be powered by Windows 7.

Really interesting move, and quite a WP7 endorsement.

[stusser]

Well, their options were to be one of huge group producing android phones or the premiere favored manufacturer of winphone7 phones.

I imagine they approached Google and Google said "Sure, you can use android. Here's the URL of our support forums. Good luck competing with the Chinese, they've got a 3 year head start."

Then they called up MS and Ballmer immediately flew out, wined/dined, provided significant incentives to choose their platform, free dev and hardware support, etc.

[liquorice]

I'm all in favour of it:
1) It could save nokia (and I live in Finland, so that's important)
2) It could save WP7, which I like on the principle of having another major phone OS.

[Charlatan]

Not surprised at the choice, but it's by no means a slam dunk victory for either side. I think a lot of it depends on how long it'll take Nokia to get out some phones with the new OS. Until then, don't you think Nokia is pretty much dead in the water? Not to say that everyone buying a new phone is going to be all up to date on what's going on in the business arena, but would YOU buy a Symbian phone from Nokia now when it's (more than ever) an obvious lame duck?

Perhaps this does solidify WP7's status as a mainstream phone OS choice. I think it would have survived with or without Nokia, but having a large partner like this does help.

Horace Dediu over at Asymco has some interesting analysis of the announcement (and incidentally, this guy does some really interesting/insightful analysis of the telecom industry).

[RepoMan]

Hooray for interesting analysis!

Yeah, I can't give myself too much credit for this, it was obvious to everyone. The only good thing about it for Nokia is that Nokia is a lot less doomed now than it was yesterday. Which, in the long run, is a great thing for Nokia.

The XBox was considered a big loser for Microsoft way back when, with tinky market share next to Sony and Nintendo. Look at it now -- in front of the console race in the Americas. Best case scenario here (if you like MSFT and/or work for them and/or own stock in them, all of which I do) is that WP7 is to iPhone as the XBox was to the Playstation 2.

[stusser]

The xbox was released in 2001 and the division didn't show a profit until 2008. Who knows if they made all their money back, even today? Anyway, MS is in for the long haul.

[LMN8R]

I'm honestly surprised by the magnitude of the announcement. I thought it would be a broad partnership with multiple partners - WP7 sure, but also Android. This kinda makes Elop look like Microsoft's lapdog instead of a strong CEO.

It also sounds like we won't be seeing any results of this partnership until at least 2012.

[stusser]

Oh I disagree. I expect MS to provide significant assistance to nokia, leveraging their experience and market share in the 2nd and 3rd world to get winphone7 devices out at all price points. I expect nokia will announce a "halo" winphone7 device that engadget will jizz over, but their focus will be on delivering inexpensive devices to north africa, india, the middle east, etc, all of which will run microsoft's ad platform, OS, and search engine.

[mkozlows]

I don't see how Microsoft phones could possibly be cheaper than Chinese-made phones with license-free Android.

[Linoleum]

I predict a lot of Dilberteque internal warfare trying to get the transition executed.