With almost a full year under its belt, Microsoft has managed to take the Lumia line of Windows Phone devices and make a seamless transition to the low-end market. During Microsoft’s FY Q3 earnings report, it turns out that the amount of Lumia devices being sold are slightly increasing YoY. Unfortunately, because the low-end smartphone buyers deal with more constrained price points, Microsoft’s gross margins for the phone line have declined.
Microsoft has reported that 8.6 million Lumia smartphones have been sold, which is an 18% growth compared to the previous year. This is great news and is likely due to the host of new, and rather attractive low-end Lumia devices that have been released over the past few months. Microsoft also reports that Windows Phone revenue has declined by 16% primarily due to a higher mix of low royalty devices.
It looks like Lumia phones are slowly starting to replace the sales of non-Lumia phones. The issue is, that users of non-Lumia phones are jumping to other low-end smartphones faster than Microsoft can sell Lumias. Perhaps the Windows 10 experience on phones can attract those non-Lumia buyers at a fast clip.