Windows Insider

Microsoft's Phone Retreat Doesn't Spell Demise of Windows Mobile

These may be dark days for the company's phone efforts -- but there is hope for a strong comeback.

• By Ed Bott
• 05/27/2016

Despite owning a nominal slice of the smartphone market, Microsoft has remained steadfast in its commitment to Windows Phone. Until this year, that is, when the company seems to have given up on the category altogether.

If you want to know the reasons for the abrupt pullback, just look at Microsoft's close partner, Intel, which has spent $10 billion developing chips for mobile devices, with virtually nothing to show for the effort. After disappointing earnings in this year's first quarter, Intel canceled its upcoming SoFIA and Broxton chips for smartphones and tablets.

The move effectively dashes all hopes for the Surface Phone, at least in the next two years.

Microsoft has made its share of missteps in mobile over the past decade (just ask a developer), but the current move is just smart business.

The smartphone market in developed nations is mature. A few years ago, when the total smartphone market was increasing by double-digit percentages every year, even capturing a small percentage of the total market meant a growing business. Now the only way to gain market share is to steal it from someone else.

And even in overseas markets where growth is still occurring, the pressure from low-cost manufacturers is intense. Some companies most Americans have never heard of, including Huawei, ZTE and Xiaomi, have built supply-chain advantages that even Apple would envy.

So getting out of the low-margin, low-growth smartphone business makes sense.

But does that mean the end of the Windows Mobile platform? I don't think so. For the way forward, just look at Microsoft's core enterprise business. Yes, those customers are price-conscious, but they're more focused on business requirements, especially security and manageability. And there's evidence that they're replacing portable PCs with smaller, lighter touchscreen devices.

In the past year, I've seen more and more tablets showing up in work scenarios:

• A Comcast field tech who came to my office recently used an old, beat-up iPad to run diagnostics on a misbehaving router.
• On several recent business trips, I've watched flight attendants use handheld devices (including Windows Phones) to process credit cards for in-flight transactions.
• As I came off a recent flight, I saw a row of wheelchairs on the jetway, each with a small Android tablet displaying the passenger's name.
• To process my credit-card payment for the taxi ride from that flight to my hotel, the driver used a low-cost, company-issued Android tablet.
• And I admit I was startled recently when one of my favorite local restaurants replaced its old PC-based point-of-sale system with a new one built using Surface tablets.

And those are only the devices I could see. I'm sure there are similar transformations going on in back offices.

The point is, not all mobile devices require smartphone capabilities to fulfill their purpose. Although each is capable of serving as a general-purpose computing device, they were deployed to meet specific business needs. And they were probably purchased through commercial channels.

That's as neat a description of the future of Windows on mobile devices as you could ask for.

There are also signs that leading PC makers are starting to build high-quality, manageable, business-focused devices for those markets.

Consider the just-released upgrade to Dell's line of 8-inch Windows tablets. The Venue 8 Pro 5855, announced last fall and shipped in early 2016, uses an Atom X5 CPU and runs the desktop version of Windows 10. On its Web site, Dell begins its description of the device with the word professional and calls the tablet "perfect for specialized applications."

HP's Elite x3 runs Windows 10 Mobile on an ARM processor. Technically, it's a smartphone, but you won't find it in retail outlets. HP describes it as "built for business" and highlights the ability of admins to lock down access to the device and its data with "integrated security measures built into the hardware and operating system."

The big question now is whether business-focused mobile devices running Windows 10 can make a dent in the enterprise. But for corporations that already have a large investment in Windows infrastructure, there's a strong case Windows Mobile can win converts.