Microsoft Isn’t Just Losing Smartphone Market Share: Its Mobile User Base Is Actually Shrinking
Few technology markets have exploded over the past few years like the smartphone industry. This has made a fortune for Apple, where the iPhone business should pass $100 billion in sales this year. And it has been great for Google, the smartphone market leader. Think about it: Last decade’s web search engine is now one of the world’s leading platform companies.
The smartphone market has been less kind to Microsoft, which was last century’s leading platform company on PCs, but is struggling to catch up to Apple and Google on mobile devices. So yesterday, I published a post on ReadWriteWeb arguing that Microsoft’s mobile comeback is “looking terrible,” based on continued declines in smartphone market share, despite a solid new mobile platform, Windows Phone 7:
One troubling sign: Even now, more than a year after Microsoft started shipping Windows Phone 7 devices, U.S. mobile customers are getting rid of Microsoft devices faster than they’re buying new ones.
The most common criticism I’ve gotten so far is that my story goes on to discuss Microsoft’s smartphone market share (U.S.-only, via comScore) but not Microsoft’s share of overall phones, or its user base in absolute numbers. Well, I had actually done some of those calculations before I wrote the post, but didn’t include them to keep things simple. But the reality is that those numbers make Microsoft look even worse.
While the U.S. smartphone population has more than doubled in size over the past two years, the population of Microsoft phone owners has declined.
Specifically, while the number of smartphone owners in the U.S. — according to comScore — has grown to 104 million from 45 million, the number of Microsoft smartphone owners has declined to roughly 4 million, from 7 million. (It actually increased a little in the middle of 2011, but dropped back down in comScore’s more recent reports.)
It’s actually been worse for RIM than for Microsoft, but RIM’s problems are well-documented. And Microsoft is the one getting all the praise for Windows Phone 7.
It’s a little premature to say it’s all over for Microsoft. This very chart proves how fast one’s fortunes can change in an industry dominated by 2-year carrier service contracts. (And, again, these are U.S.-only stats from one source. The U.S. is still probably the single most important smartphone market in the world, but it’s not the only one. Still, I haven’t seen anything about Windows phones taking off like crazy in China or even Finland — Nokia’s home country — yet.)
But as I point out in my earlier post, a lot will have to change for Microsoft to succeed here. And based on Microsoft’s track record in mobile, the odds of that happening seem slim. But the next couple of years are crucial — with RIM in the state it’s in, there aren’t many options for Plan B.
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