Buying Nokia wasn't Microsoft's biggest mistake – this was


I remember when I first saw Windows Mobile running on a variety of phones, at a packed launch event that included a validation from Apple lover Stephen Fry. It was set to be a brave new world, one where the three horse race (remember, RIM’s BlackBerry OS was a thing back then) would be joined by a powerful fourth.

Windows Mobile (the prior incarnation of Microsoft’s Mobile OS) was a curious thing before 2010, a powerful operating system that was ravaged by age. It was all function and no beauty in a world where simplicity and smoothness were becoming necessary factors in a smartphone purchase.

So with the reboot to the new tiled interface, combined with all the enterprise, security and software smarts of Microsoft, things looked rather rosy. Yes, it was going to be a tough road, but all the pieces were there.

Window Phone
Apparently he wasn’t even paid to be there

And then Nokia joined the party, and that’s when things looked set to become turbocharged. I remember Gartner predicting in 2012 that Windows Phone would be nicking 20% of the world’s smartphone share in 2015, with iOS slipping behind thanks to a dedicated belief in a single phone model.

Today, with Microsoft laying off thousands of staff members from the smartphone division and massive question marks hanging over the future of phone production by the brand altogether, I can’t help but think Microsoft made one huge mistake when it purchased Nokia in 2013 – making more flagship phones.

As soon as Windows Phone 8 appeared it was clear high-end phones weren’t going to cut it – and it was obvious. Big brands stopped making Windows Phones in the volumes they were, not willing to gamble on the unproven OS again.

But when the Nokia Lumia 520 landed, it was a sensation, a super cheap smartphone with a virtually identical interface to the one you’d find on a phone five times the cost.

Sure, the hardware was much poorer: the camera was terrible, the engine inside underpowered and the screen quality awful – but it was five times as cheap. You could have one of these for every working day of the week, if you wanted to really irritate yourself between each weekend.

You could argue that Samsung has the same strategy and has made it work well. You can buy a super-cheap Galaxy handset, or spend multiple times that amount to get something like the Galaxy S7 Edge. But unlike the Windows Phone range, Android has some serious clout when it comes to development, functionality and, most importantly, an app ecosystem.

Talk to anyone that uses a Windows Phone and they’ll largely be disparaging, talking about how many apps they can’t use because they’re not available. Microsoft acknowledged this problem and tried its damndest to attract developers – but without a large user base, app creators just weren’t interested. Even those that did make an app didn’t update them as frequently.

Nokia Lumia 520
The phone that Nokia should have used as a model for the future

Microsoft made a huge mistake going after the flagship market in an attempt to create a halo product that would shine a beautiful light on the rest of the portfolio, raising all boats in the tide. Which is why it made a mistake with the Nokia phone division purchase by not focusing all its efforts on making Windows Phone devices attractive at the cheapest end of the market.

If you look at the most popular Windows Phone handsets in the past five years, after an early surge of high-end devices (which were all that was on offer from a variety of top-end brands) the lower end phones took the crown: the Lumias 520, 620, 530 and 640 all outshone their more expensive brethren as people not willing to spend hundreds on a new phone hoovered up these handsets from a well-known brand.

Had Microsoft pulled the trigger, jettisoned plans to spend time and money creating and marketing these hero products, we could have seen greater innovation, lower costs and while it would have been razor thin margins we’re now seeing Android handsets operating just that way cleaning up in terms of market share.

That market share would have been golden to Microsoft. Developers would have started to trickle in, attracted by the scale. The phones would have become more attractive.

And in the alternate timeline, Microsoft’s Terry Myerson could have strode out on stage at the end of this year, whipped out the Surface Phone and driven a crowd into a frenzy, media outlets predicting that this was the phone that should have Apple and Google running scared.

But while 2012’s predictions for iOS are largely true (it managed only 13.9% compared to the 17.2% predicted in 2015, according to IDC) the excess wasn’t taken by Windows Phone, but by an army of supercheap Android phones.

A chance Microsoft missed.

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