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2014: A bumper year of ups and downs for Windows Phone, but what will the future bring?

Windows Phone

Now, in the final stretches before January, and with the uncertainty of the year ahead, it is safe to say that Windows Phone is at something of a crossroads.

2014 has been a momentous year for the operating system, arguably the most important since its inception. Amid a number of major developments, the completion of Microsoft’s Nokia purchase was undoubtedly the climax. With the closure of that deal, Windows Phone’s only major hardware champion and the source of over 90% of its devices vanished into the depths of Microsoft.

Whether this will prove to be a positive or negative development in the long run is, as of this moment, impossible to tell. One thing that is sure, however, is that the press and the public are very keen to see what the future will bring.

Indeed, as a user and advocate of the operating system, ambiguity has almost become a state of being. 2014 has certainly proved that, while Microsoft giveth, it also taketh away. With the introduction of various features in the 8.1 update, the operating system reached virtual feature parity with all of its competitors. Yet, with the loss of Office and Here Maps exclusivity, two previous major selling points, recommending Windows Phones to friends became just a little more difficult.

Yet, with more apps available, and with robust device sales (even in a year with very few releases), all is certainly not lost. This is a point that seems not only to have sailed above a number of figures across the media, but reached orbit. Doom and gloom are certainly easier to sell, and certainly take less to buy into. That isn’t even to mention the curtain-twitching Nokia die-hards who smell conspiracy among the highest echelons of Redmond’s corporate boardrooms.

Nokia

Jackdaw Research, an analytics firm, with data from AdDuplex, have compiled figures from the year behind us and have looked into the future of Windows Phone. What they have produced is balanced and informative, yet startling and close to the bone. There can be no doubt — Windows Phone is at a crossroads, where one path leads to relevance, the other to obscurity.

How then to improve? What can be done to arrest this situation and force it in a positive direction? Let’s have a look, at the here and now of Windows Phone.

The low end of the market

One thing that is abundantly clear regarding Windows Phone — it has primarily sold well at the bottom end of the market rather than at the top. Devices such as the Lumia 520 have been the primary drivers of growth for the operating system. This is often a cost issue, and indeed due to the very functionality of the operating system. Whereas purchasing an Android phone costing less than $100 might entail a large number of sacrifices with regards to the user experience, including lag, with Windows Phone this is never the case. Due in part to Microsoft offering manufacturers a template for design, ensuring a base level of minimum specs, but also due to the highly strict and efficient memory management built into the OS, Windows Phones always run smoothly on any handset.

This has helped device shipments grow throughout the year, and remain steady at the higher levels, representing nice bump in growth when compared to previous years. Whereas in Q3 2013, 34 million devices were shipped. In Q3 2014, this reached 34.3 million. Though seemingly only a small difference, when taking the year as a whole into account, 2013 saw 112.2 million device shipments in total, whereas for the first three quarters of 2014, 102.6 million devices were shipped. This was in a year with less availability, and, without the data for the last quarter of 2014 available, it is safe to predict that device shipments will easily surpass those of the previous year.

Lumia 520

Though device shipments have been increasing, this does not necessarily translate to overall market share. In a bumper year for both Android and iOS, Windows Phone has seen its market share fall to a lowly 2.8% globally, compared to 3.3% in the same period during the previous year.

That a large number of the devices shipped have been budget offerings is in itself a double edged sword. On one hand, it is a clear reflection both of the quality of the experience on offer at the lower end, and also a vindication of moves by Microsoft and its partners to put phones into the hands of the ‘next billion’ smartphone users. However, the profit margin on these devices is razor-thin, if not non-existent, meaning that increasing revenue (as shareholders expect) can become a little Sisyphean.

There is also the elephant in the room, that is Microsoft itself. Now that the folks at Redmond are the major manufacturer behind their own operating system, where other manufacturers fit into the equation is something that is yet to be figured out. While Microsoft may have wooed over twenty smaller OEMs to produce Windows Phone devices, it is telling that at the moment only those who are cajoled or who have nothing to lose are taking a chance with the OS.

HTC

The app situation

Perhaps the biggest success story of the year with regards to Windows Phone is the app situation. The store has seen a stratospheric rise in the number of apps available, and that doesn’t necessarily entail two-hundred thousand flashlight apps clogging the pipes. Rather, many popular services now run official apps on Windows Phone, and even if some utilities, such as YouTube, decline to grace the app store with their presence, high-quality third party offerings are available. Criticism of the Windows Phone app situation with regards to its intrinsic qualities has failed to be a valid front, yet the fact remains that Android and iOS continue to balloon inexorably. Their rise cannot be allowed to continue unchecked if true progress is to be made on the mobile front. Even though Microsoft has changed the app culture of Windows Phone with the introduction of such concepts as Microsoft Garage, the fact remains that the OS is not a high priority for development in the eyes of many.

2014 has been something of an odd year for the operating system. Among a number of major changes, especially including the introduction of the inscrutable Satya Nadella to the picture in the place of Steve Ballmer, Windows Phone has held its own against the opposition. Yet, positioned at a distant third, is the system entrenched while its rivals rocket on ahead?

Nadella and Elop

A deeper question still remains unanswered, what will Nadella do? The new CEO of Microsoft is difficult to read with regards to Microsoft’s mobile OS — it is not yet possible to ascertain whether his motives are purely user-centered. As many previously exclusive Windows Phone apps become available for (and even better on) other platforms, it is yet to be seen whether Redmond will remain committed.

Stay tuned for the second part of this piece to find out what the future of Windows Phone may offer, and certainly the possibilities that 2015 may yet bring. While iPhones are getting bigger and Androids are getting a little more homogenized with every release, Microsoft has the manpower, revenue, and vision to bring something truly unique to the table. However in 2015, will it be too late?

Do you think Windows Phone has had a good 2014 year? Let us know in the comments below.

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