Microsoft CEO admits company 'clearly missed' the smartphone race

Posted Oct 25, 2016 by James Walker
Microsoft CEO Satya Nadella has admitted the company missed the smartphone trend altogether with its ill-fated Windows Phone OS. He said he intends to change Microsoft's image through next-gen technology including its HoloLens mixed reality headset.
Satya Nadella  CEO of Microsoft.
Satya Nadella, CEO of Microsoft.
Josh Edelson, AFP/File
"We clearly missed mobile," Nadella said at the Wall Street Journal's WSJDLive 2016 global technology conference. "There is no question," the CEO added, two years after taking over at the helm of Microsoft.
The company entered the smartphone race late in 2010 with Windows Phone 7. The platform was initially received very well with some critics and analysts suggesting Windows Phone would fend off newcomers iOS and Android within a few years.
In practice, iOS and Android have together seen off Windows Phone almost completely. The platform has never taken off, despite Microsoft's repeated attempts to invoke new interest in the platform.
Windows 10 Mobile, the latest version of the operating system, now has a global market share of less than one percent. Developers are reluctant to build apps for such a tiny sliver of smartphone users. In turn, consumers refuse to use a platform with so little commercial attention.
Despite its continued struggles, Microsoft has refused to give up on mobile. It is still developing Windows 10 Mobile and it retains a small but significant user base of enterprise customers and loyal Windows fans. Discontent is growing though as Microsoft is giving off mixed signals regarding the platform's future. Nadella did not clear up the company's intentions at the Wall Street Journal's event, instead citing the company's work in emerging technology as its future driving force.
"You've got to be able to add unique value and be on the hunt for the next big category," Nadella explained. Microsoft has repetitively failed to bring "unique value" to smartphone customers. However, it has demonstrated it is capable of innovating in artificial intelligence and cloud computing, fields that are only just attracting mainstream commercial interest.
Microsoft believes HoloLens could be the "ultimate computer," according to Nadella. HoloLens used mixed reality technology to bring apps and games into the real world around you, letting you fight aliens on your wall or pin a calendar to your table. Microsoft released a $3,000 developer's version of the headset earlier this year. It has not stated a time frame for a consumer launch.
With HoloLens, AI and the cloud now Microsoft's focus, it remains unclear when or if it will try its hand at smartphones again. The company has previously said it's "fully committed" to Windows Phone but admitted it's not currently an important asset. It's thought Windows 10 Mobile may get more attention next year.
"We're going to do some cool things with phones, but this year phones are an important part of our family but not the tip of the spear," Terry Myerson, Microsoft's executive vice president of the Windows group, said in March.
With Windows 10 Mobile, Microsoft has begun to innovate in mobile again. Its Continuum feature enables phones to seamlessly transition into a full PC experience when connected to a monitor, mouse and keyboard. However, the company's lack of market share and inability to actually sell devices means its software abilities are going largely unnoticed by consumers.
It will take a significant new push to finally get Windows 10 Mobile competing with Android and iOS, one Microsoft currently seems reluctant to make. Nadella now appears willing to concede defeat in the mobile space, moving onto markets new instead.