At the Mobile World Congress (MWC) 2014, Barcelona, Microsoft said South Korea’s LG, India’s Xolo and Karbonn, and ZTE, Foxconn, Lenovo, Gionee and Longcheer are turning to Windows Phone software for low-cost smartphones.
Gartner says sales of high-end smartphones will slow as increasing sales of low- and mid-price smartphones in high-growth emerging markets will shift the product mix to lower-end devices. This will lead to a decline in average selling price and a slowdown in revenue growth.
Reuters reported that Microsoft is pushing to reach a far wider audience for smartphones running its Windows Phone software by turning to cheaper chipsets and easing restrictions on how phone makers use its software to encourage them to drive down costs.
Windows Phones typically sell for several hundred dollars a piece, although Nokia’s Lumia 520 handset has an unsubsidized price of about $190 in Europe.
The sub-$100 smartphone market, however, is dominated by Google’s Android operating system, which has lower licensing costs, is more adaptable by device makers, and runs on more, and cheaper, chip sets that run radio and other functions.
Nick Parker, Microsoft’s senior vice president for handset makers, said: “We are open for business on Windows Phone to anyone who wants to build a Windows phone.”
Recently, Canalys Analyst Jingwen Wang said that market uncertainty and caution affected Nokia’s performance in Q4, with Microsoft’s acquisition of its devices business yet to complete, as did arguably insufficient marketing, as Nokia and Microsoft failed to stimulate sufficient demand for the latest Lumia products to deliver a seasonal sales boost. With Lumia accounting for such a dominant portion of Windows Phone shipments, the growth of the OS faltered too.
Microsoft has much to do if it is to continue carving out a growing share of the smart phone market, not least driving the platform down to new entry-level price points, delivering innovation and new features, particularly at the high-end, and proactively working with, supporting and encouraging developers to commit to building compelling apps, and bring its app story closer to parity with its competitors. It cannot afford lengthy delays or distractions, and the combined Windows Phone devices team needs to hit the ground running.
Gartner expects smartphones to continue to drive overall sales in 2014 and an increasing number of manufacturers will realign their portfolios to focus on the low-cost smartphone sector.
In the smartphone OS market, Android’s share grew 12 percentage points to reach 78.4 percent in 2013. The Android platform will continue to benefit from this, with sales of Android phones in 2014 approaching the billion mark.
Android phones from dozens of handset makers accounted for almost four out of every five smartphones sold, or 781.2 million units, last year, according to Strategy Analytics. Microsoft was a distant third in market share terms, behind Apple, which shipped 153.4 million smartphones.
Some 5.7 million Windows Mobile units were shipped worldwide, Strategy Analytics said. While it gained a more than 10 percent share in some markets, for example Italy, other markets like the United States remained tough, Vice President Joe Belgiore said in Barcelona.
The next major update of the software in coming months would allow it to support less expensive chip sets from its existing supplier, Qualcomm.
Some of the Windows Phone standards would also be eased, he said. Microsoft had previously kept a tight grip on hardware specifications, for example insisting on three physical buttons, to create a uniform Windows Phone user experience, regardless of handset maker.
Microsoft is investing in improvements that would help handset makers get Windows Phone on devices at lower costs in terms of manufacturing, licensing and those sorts of things.
Microsoft also said on Sunday it would update its Windows 8.1 operating system, which runs on PCs and tablets, in the coming months after research found traditional keyboard users were less satisfied with the software than previous versions of Windows.