Microsoft to partners: “your investment in Windows phones is not at risk”

Kareem Anderson

Another year, another set of emails from Microsoft regarding its ever-confusing smartphone efforts. Thanks to the diligent work by the folks over at Windows Central, an internal memo sent to Windows partners in the wake of recent organizational “streamlining” around Microsoft’s mobile business strategies has come to light. Yesterday, Microsoft prepped investor awareness around its plan of incurring a restructuring charge of $950 million on the back of cutting 1,850 employees from the company.

Of the 1,850 employees being let go, 1,350 are from the now increasing sinkhole that was the Microsoft – Mobile Oy transition. Following the news of layoffs and another billion-dollar write-down, Microsoft CEO Satya Nadella and Windows and Devices head Terry Myerson released a couple of internal emails to the company to, perhaps, stem the bleeding of morale and confidence the news would have on the Windows Mobile team and its international phone partners.

Today, a third email has surfaced further attempting to clarify Microsoft’s seemingly ambivalent nature towards its smartphone and mobile future with partners.

Windows 10 devices company partners
Windows 10 devices company partners

According to the email, not only is Microsoft redefining its target audience with regards to mobile devices, but the company is also looking at an international concentration in selected “core markets” for distribution and marketing.

Unlike last year’s memo that had Microsoft refocusing on three tiers of smartphone distribution that included low-end, flagship, and enterprise customers, the company’s new focus appears to be entirely centered around the enterprise. Consolidating further around an enterprise and business target, Microsoft’s mobile offerings will now focus on security, management and increasing the value proposition of its extended desktop experience, Continuum.

Along those same lines of paying laser-like attention to business and enterprise workflows, Microsoft will also be pulling back from markets where a premium for those three core emphases are less in demand. Microsoft’s new core markets now include US, UK, France, Germany, Poland, Australia, and Western Europe, which will include Austria, Belgium, Denmark, Finland, Ireland, Ital, Netherlands, Norway, Portugal, Spain, Sweden, and Switzerland.

Notice that China, Brazil, and India are not included in Microsoft’s “core market” list. Ironically, as Apple attempts to break into the India market, Microsoft is pulling out and by our logic, for good reason. The authors over at Windows Central echo our own beliefs here at WinBeta, which with the sell-off of the low-end Lumia line Microsoft is now set to focus entirely on high-end aspirational business-focused devices, similar to its Surface line.

Microsoft is more than supportive of local OEMs in the areas, who know what customers want, building Windows 10 Mobile devices. Beyond simply supporting, Microsoft appears ready to partner with many to provide unique Windows 10 Mobile experiences.

Japan Windows 10 Mobile event
Japan Windows 10 Mobile event

Realistically speaking, that plan has a few gaping holes in its strategy, chief among them, low-end device customers seeking Android alternatives made by the same company.  However, Microsoft remains confident in the face of adversity:

I want to assure you that your investment in Windows phones is not at risk. The mobility of the Windows 10 experience remains core to our More Personal Computing ambition. We will continue to support and update the Lumia devices that are currently in the market, and development of Windows 10 phones by OEMs, such as HP, Acer, Alcatel, VAIO, and Trinity; as well as develop great new devices. We’ll continue to adapt Windows 10 for small screens. We’ll continue to invest in key areas -security, management, and Continuum capabilities – that we know are important to commercial accounts and to consumers who want greater productivity. And we’ll help drive demand for Lumia devices.”

Reading the memo at face value, it would seem Microsoft is abandoning its ambitions to sell a consumer facing mobile product and instead heading for a business play, which is a strategy that still leaves many questions unanswered.

While putting their faith in their partner’s ability to push demand for Windows phones has arguably helped expedite the demise of the platform, Microsoft seems set to try it again without revealing its plan to offer OEM’s competing in increasingly saturated low-end markets and real-world differentiation. Microsoft also seems steadfast on targeting businesses with its premium devices and highly secure, manageable and Continuum-enabled operating system despite the inventible clash against a growing (bring-your-own-device) BYOD trend. The same BYOD trend that saw iOS and Android flood into the workplace, ending the days of duel wielding smartphone employees beholden to Blackberry’s highly secure and manageable operating system.

Lastly, Microsoft has left the largest question for partners who are dealing in the consumer space, unanswered, what about apps? Unfortunately, today’s mobile landscape is littered with the remains of ambitious smartphone operating system starved of a viable app ecosystem. Without a clear answer to the app question, partners looking to continue work on Windows 10 Mobile enabled devices will have a hard time pitching a secure, manageable, and Continuum-only device without being able to say, “oh and you can also use PayPal, Facebook Live, Lyft, or Snapchat.”

Panos Panay with Lumia 950 and 950 XL

While Microsoft’s days of competing in the consumer market space as a handset device maker may be behind it, it’s road to the high-end business mobile provider aren’t without its difficulties as well. Microsoft’s pivot and shift, however, allows them a bit of breathing room from the harrying demand by investors and journalist to compete in a market that is arguably reaching maturity, and focus on creating a new or adjacent market as it did with its 2-in-1 Surface tablet. Whether or not Microsoft can catch its lighting niche in a bottle for the second time is up for debate.