Hey, Microsoft! Fish or cut bait on enterprise phones

Window of opportunity for Windows phones will close by end of year, says analyst

Microsoft has a shot at saving what remains of its smartphone strategy, but the pivot toward the enterprise must be quick, an analyst said today.

“They’re essentially starting over from scratch,” John Delaney, an IDC analyst who covers mobility in Europe, said in an interview. “By the end of the year, they must show commitment from major ISVs and some really good mobile apps.”

Along with the write-down and layoffs, Microsoft also — again — changed the bull’s eye for its smartphone division: “We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability,” said CEO Satya Nadella in a May 25 statement.

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“Microsoft should have done this sooner,” said Delaney, who argued that the company spent the last two years pursuing an ambivalent strategy that neither committed the resources necessary to make headway in the consumer space or concentrate on the strengths the firm has in the corporate world.

After the Nokia acquisition, former CEO Steve Ballmer, who did the deal as one of his last acts before stepping down, said Microsoft would create a “family of devices,” including a broad portfolio of smartphones. That was pared to a smaller number of models in 2015 when Nadella wrote off the Nokia purchase, and more, leaving the company to produce low-priced phones, flagships for the Windows’ loyalists, and business-centric devices.

In May, Microsoft sold its feature phone business to Taiwanese contract manufacturer Hon Hai, better known as Foxconn, chopping the low-end leg of Nadella’s tripod. The latest write-off put an end to consumer smartphones from the company.

That left business standing.

But now that Microsoft’s promised to concentrate on the enterprise, it needs to demonstrate with concrete examples. Most important are apps. “[Windows Mobile 10] still has a critical app gap,” Delaney said. “And the issue for those that are there is that many are not as good as on other platforms.”

In an analysis written last week, Delaney cited companies like Salesforce, Oracle and Sage when he said Microsoft should do “whatever it takes to get the leading enterprise ISVs [independent software vendors] to build and maintain excellent Windows Mobile versions of their application software,” if it is to give phones a legitimate shot.

The goal, said Delany, should be two-fold: First, to get the apps out, but second, convince the market that Microsoft is serious about investing in the enterprise phone market.

Microsoft should make haste, Delaney urged, because its window of opportunity won’t remain open forever. Two years ago, 45% of the European enterprise workforce had a smartphone, but in the most recent IDC survey, that number had climbed to 56%. “That means the greenfield opportunity for Windows smartphones in Europe is smaller by at least one-fifth now than it was two years ago,” Delaney wrote in his analysis.

But he remained convinced that Microsoft could still make a smartphone play for business users, especially with lower-priced devices — in the $150 and lower range — for those workers not yet bringing a phone to work, for work.

Windows-centric shops looking for compatibility with existing applications, and the increasing number of firms shifting from the BYOD (bring-your-own-device) model toward a stance where the company decides what workers use, may still consider a Windows-powered smartphone, Delaney said.

“The advantage of Windows is that it is available in a more uniform platform across all device types,” he said, citing Windows as — like iOS — un-fragmented, and more secure than Android. “Microsoft’s sweet spot is this ability to offer enterprises a combination of a consistent platform with low-end devices in terms of price.”

Although Delaney declined to predict Microsoft’s chances of pulling off this latest change in direction, he was certain that time is of the essence because of the Redmond, Wash. company’s past practice. “Having finally grasped the nettle, it’s imperative that Microsoft moves quickly to make the most of the opportunity that remains,” Delaney wrote.

“Better late than never,” he said.

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