Nokia Acquisition No Help for Windows Phone

October 10th news: According to Bloomberg, the $7.2 billion acquisition did not help Microsoft attract more Windows Phone app developers. In this aspect, the Nokia acquisition was a failure.

For some developers who have been trying to avoid developing Windows Phone apps, the closer relationship between Microsoft and Nokia has not changed much. Most people believe that the investment in Windows Phone app development does not match the revenue. Instead of focusing on attracting developers, Microsoft should prove its ability to gain market share.

Since the debut of Windows Phone in 2010, Microsoft has been striving to attract developers to this platform. This effort intensified after CEO Steve Ballmer announced the acquisition of Nokia's mobile phone department last month. Through this acquisition, Microsoft hopes to boost its share in the $280 billion smartphone market and attract various app developers. Microsoft's ultimate goal is to make the Windows Phone platform the third major platform alongside Apple's iOS and Google's Android.

Lack of an Attractive Ecosystem

Interviews with over a dozen app development companies indicate that even if Microsoft completes the deal with Nokia, developers will still view Windows Phone as a less attractive ecosystem. Developers stated that Nokia's mobile business would indeed provide Microsoft's Windows Phone with a ready-made sales channel, but the crux of the problem lies in too few users, high development costs, and Microsoft's confusing development documentation.

In the end, to attract developers to a platform, the most important thing is to let them know they can make money there. William Hurley, co-founder of app development company Chaotic Moon, said that the sales generated by their game Dragon Academy in one hour on the iOS platform equals the entire year's sales on the Windows Phone platform. "So what would you do? Of course, abandon the Windows Phone platform."

Severe Platform Lag

Currently, Microsoft's Windows Phone platform has only 175,000 apps, while Apple's iOS platform has over 900,000, and Google's Android platform has over 1 million. Even for apps available on all three platforms, the launch time lags significantly behind the other two major platforms.

The lack of popular apps like Flipboard, which debuted on Apple's iPad in 2010 and launched an Android version in 2012 but has no plans for a Windows Phone version, severely hinders the growth of Microsoft's smartphone market share. Other missing apps on Windows Phone include Pinterest, Instagram, and Uber.

The severe lack of apps actively impedes the growth of Microsoft's smartphone market share. Microsoft's global smartphone market share in the second quarter was 3.7%, compared to 79% for Android and 13% for Apple.

Microsoft executives acknowledged their shortcomings clearly, and acquiring Nokia was aimed at addressing these deficiencies. Joe Belfiore, Vice President and Manager of the Windows Phone department, stated they would accelerate the development of Nokia phones using Microsoft software to create a more cohesive marketing strategy. He indicated that this acquisition would allow Microsoft's Windows Phone to utilize Nokia's sales channels, especially retail staff who could introduce Microsoft devices to customers in stores, providing a good opportunity for users to familiarize themselves with Windows Phone.

Changing Mindsets

"If you don't focus on training retail salespeople, when customers walk into your store and ask about mobile phones, they won't get the latest information about Windows Phone."

Microsoft continues to reduce the development and marketing costs of Windows Phone apps. One example is Pandora Media's music streaming service. Microsoft proactively developed this app and continuously provided software updates. Facebook's Windows Phone app was also developed by Microsoft.

Belfiore said: "We help development companies grow as much as possible, whether by providing funding or collaborating with developers. In some cases, we develop related products ourselves."

Wavering Developers

Belfiore mentioned that Microsoft would conduct more demonstrations for developers, including pre-installing some apps on phones.

However, some developers still need more convincing factors. The CEO of video editing app Givi, Greg, hoped Surface would take off in the market. Last year, Givi created an app for Microsoft's Windows 8 operating system and Microsoft's Surface tablet. Given Microsoft's success in personal computers, Givi believed Surface had a promising future. However, after several months of trials, Givi in San Diego decided to focus on iPhone and Android device development.

Now, with Microsoft's acquisition of Nokia, Greg once again shifts his attention to the Windows platform, "We gave it a try, placed a bet, hoping this market would take off."

A Long Road Ahead

As mentioned earlier, developers hoped Surface would succeed, but the final result was that Surface failed, with Apple's iPad dominating the market. Microsoft suffered a $900 million asset impairment due to the Surface price cut. Moreover, sales are expected to remain sluggish this year, though Microsoft has not disclosed how many of its mobile devices and services were sold.

Harvard Business School professor David Yoffie said, "The lack of Windows platform apps is a fatal blow to customer adoption."

However, many developers still hope Microsoft can carve out a path in the market dominated by Apple and Google, finding another viable outlet for their apps. This would change the current development ecosystem. But the premise is that developers receive good returns.

Additionally, Microsoft can focus on commercial clients. Since many large companies are already using other Microsoft products, Microsoft already has a solid customer base.

The acquisition of Nokia by Microsoft will not change much in the short term. However, from a long-term perspective, this investment will create some opportunities for Microsoft."