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Microsoft’s Windows phone retreat sees massive 81% decline in revenue in FY17 Q2

Hidden away in Microsoft’s financial earnings report for the 2017 financial year’s second quarter (a.k.a. the 2016 calendar year’s fourth quarter) was a brief mention of the company’s mobile phone business which, as most observers would guess, isn’t doing so well right now.

According to the official report, phone revenue declined a whopping 81% in the fourth quarter of the 2017 financial year and this contributed to a seven percent decline in revenue for the company as a whole. This also affected Microsoft’s Personal Computing revenue which decreased 5% “primarily by lower phone revenue.”

Microsoft’s mobile strategy took a dramatic turn in 2016 as the company paused the manufacturing of first-party Windows phone handsets. Mobile wasn’t completely abandoned though as the Windows 10 Mobile operating system has seen continuous updates and improvements and Microsoft continues to describe itself as the “leading platform and productivity company for the mobile-first, cloud-first world.”

While technically unconfirmed by Microsoft, there have been numerous reports that the company is working on a revamp of the Windows phone concept which many are referring to as the Surface Phone. Microsoft CEO Satya Nadella has stated in a recent interview that Microsoft is working on “the ultimate mobile device”, there have been reports that a Surface Phone prototype is already in production in China, and Microsoft’s Chris Capossela has gone on the record as saying that the next Windows phone will be “brand new category.”

There’s no denying that such a dramatic revenue decline is concerning but it’s also incredibly likely that this deliberate phasing out of the existing Windows phone experience is part of a greater strategy for a potential mobile revival later in 2017. Whether this strategy will work though is anyone’s guess especially with so few details confirmed at the present.

What do you think about Microsoft’s mobile strategy? Do you see them recovering or is this truly the end of Windows phones as we know them? Sign off in the comments below.

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Could the Surface Phone save Microsoft's mobile division?