Editorial: With less than a million sales a month Microsoft really no longer has a phone business

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Microsoft revealed today that in the last quarter (January to March 2016) the company shipped only 2.3 million Lumia handsets. The number represents a shocking 73% YoY drop in sales, from 8.6% last year in the same period.

This means only around 750,000 Windows Phones are currently being sold each month, putting the phone at around the sale scale as the Xbox business. Of course unlike that business the Windows Phone business appears to be in terminal decline, and if the rate of decline continues unabated (the trend line) would hit 0 in less than 2 quarters. Microsoft is not expected to release any new handsets this year or make any changes in strategy, leaving sales to continue its free fall unrestricted. Microsoft has confirmed that even now Lumia sales to end users are low, store inventory levels are high, and revenue loss YoY will “steepen.

Of course at these sales levels 3rd party OEMs may actually start making a material contribution to sales, even if they only sell a few thousands devices a month into enterprise.

The common refrain is that Windows Phone is dead – it’s all Windows 10 now. Due to Microsoft making Windows phones a non-viable platform this is now completely true. With such a small and shrinking installed base there is no incentive for developers to create phone apps (such as Snapchat for example) for Windows Phone, leaving Windows Phones as just small Windows 10 tablets running Universal Windows Apps (when developers bother to adapt them).

The permanent absence of mobile specific apps will confirm Windows  Phones as only vertical market Blackberry-style enterprise devices unsuitable for regular users.

Windows Phone fans may believe Microsoft may simply be able to open the marketing, promotion and distribution taps next year and retake the market with a Surface phone. History has demonstrated that once market share has been lost its expensive and almost futile to try to get it back, and buyers, retailers and the press will not be easily convinced that Microsoft is back for good.

In short – Windows Phone is dead – enjoy your micro-tablet.

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