Microsoft has a shot at saving what remains of its smartphone strategy, but the pivot toward the enterprise must be quick, an analyst said today.
"They're essentially starting over from scratch," John Delaney, an IDC analyst who covers mobility in Europe, said in an interview. "By the end of the year, they must show commitment from major ISVs and some really good mobile apps."
Last week, Microsoft announced it would take another $950 million charge against earnings for the failure of its smartphone group to meet expectations, and lay off another 1,850 employees, two thirds of them former workers at Nokia, which Microsoft acquired two years ago.
Along with the write-down and layoffs, Microsoft also -- again -- changed the bull's eye for its smartphone division: "We are focusing our phone efforts where we have differentiation -- with enterprises that value security, manageability and our Continuum capability," said CEO Satya Nadella in a May 25 statement.
That's the good news. But the bad?
"Microsoft should have done this sooner," said Delaney, who argued that the company spent the last two years pursuing an ambivalent strategy that neither committed the resources necessary to make headway in the consumer space or concentrate on the strengths the firm has in the corporate world.
After the Nokia acquisition, former CEO Steve Ballmer, who did the deal as one of his last acts before stepping down, said Microsoft would create a "family of devices," including a broad portfolio of smartphones. That was pared to a smaller number of models in 2015 when Nadella wrote off the Nokia purchase, and more, leaving the company to produce low-priced phones, flagships for the Windows' loyalists, and business-centric devices.
In May, Microsoft sold its feature phone business to Taiwanese contract manufacturer Hon Hai, better known as Foxconn, chopping the low-end leg of Nadella's tripod. The latest write-off put an end to consumer smartphones from the company.
That left business standing.
But now that Microsoft's promised to concentrate on the enterprise, it needs to demonstrate with concrete examples. Most important are apps. "[Windows Mobile 10] still has a critical app gap," Delaney said. "And the issue for those that are there is that many are not as good as on other platforms."
In an analysis written last week, Delaney cited companies like Salesforce, Oracle and Sage when he said Microsoft should do "whatever it takes to get the leading enterprise ISVs [independent software vendors] to build and maintain excellent Windows Mobile versions of their application software," if it is to give phones a legitimate shot.
The goal, said Delany, should be two-fold: First, to get the apps out, but second, convince the market that Microsoft is serious about investing in the enterprise phone market.
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