Currently smartphone sales account for 27% of the total handset sales. Today low end Android devices are driving the smartphone sales and by 2015 Pyramid Research predicts that smart phones would account for more than 50% of the total handset sales. To reach higher unit sales a mobile software platform has to support low end devices. This was the main reason why Android has grown so much in the last couple of years. Every manufacturer is adopting Android not only in their high end phones but also in their low end devices. Reason of this is because low and mid range devices do volume sales. Volume sales attract manufactures as out of their total sales low/mid range devices contribute a higher percentage. Microsofts strict hardware policies have so far restricted the Windows Phone platform growth. Many manufacturers have not fully adopted Windows Phone 7 as currently there are no low / mid range devices that are supported by the platform.
43% of the current handset unit sales belong to the Asia Pacific region. Nokia's strong markets are countries like India and China. Nokia volume sales are coming from Asia Pacific countries where high end phones don't sell as much as low end to mid range devices. This is basically due to cost reasons.
So if low and mid range devices are the key to gain market penetration why restrict the platform to support high end devices only?
1. Cost reasons: Microsoft spent a lot of money in developing, researching and rebuilding the Windows Phone platform. The Windows Phone 7 is not just an upgrade to Windows Mobile 6.5, but was actually build from scratch. Billions of dollars were spent on its marketing and advertising. They don't have enough handset volume sales yet to move the platform to low/mid range devices.
2. Keeping a standardized experience: Microsoft wants the Windows Phone experience across various devices to be similar or standardized. Hardware restriction is a key to achieve this. In Android the experiences in the operating system performance is comparatively different when using a low end, mid-range or high end device. Even on the high end dual core devices there are hick ups. As far as my personal experiences goes in using Android and Windows Phone 7, I have to say the Windows Phone 7 is way optimized that Android.
Why will things turn around after 2012?
1. Devices with mid to low end hardware: New devices with better hardware specifications will come out by end of this year with the Mango (Windows Phone 7.5) update. As and when that happens the current generation of hardware will be considered as mid ranged. This cycle will continue as and when better hardware becomes available at the same cost to consumers. As time passes, by 2012 more and more manufacturers will start adopting Windows Phone 7 in their line ups. At the Mix 11 event Microsoft also lowered its hardware requirements which will enable manufactures to release mid range devices.
2. Attract Developers = more apps = more end users: The Windows Marketplace is the fastest growing application store yet. Yes, statistics show it grew faster even than Apple's App Store. With over 16,000 apps currently available more and more developers are getting attracted to Windows Phone Platform. At the Mix 11 event Microsoft announced Windows Phone 7.5 (Mango) which supports over 1500 new APIs for developers. Mango is slated to be released sometime later this year.
3. Nokia plays a Key Role: According to Pyramid Research Forecast, it can be clearly seen that 2012 is definitely the transition year for Microsoft and Windows Phone platform. Analyst still feel that the Nokia Microsoft Alliance is and would be the key factor for Microsoft's Windows Phone platform. Nokia has mentioned that with their involvement and contribution to Windows Phone development, costing will go down and it would allow them to come up with mid range devices. This however is not going to happen anytime soon, not in 2011 at least. We are looking at somewhere around early to mid 2012 for this transition to start taking place.
4. Marketplace Expansion: At the Mix 11 event Microsoft said that by fall the Windows Marketplace would be expanding to 19 more countries. So by end of 2011 around 35 countries would support Windows Marketplace. It is obvious that this market expansion is a process and will continue as the platform grows. Nokia's Ovi Store has a reach in over 190 countires. Also Nokia has tie ups with operators in most of these countries for billing. Nokia will play a key factor in expanding the marketplace reach as and when it starts to do volume sales of its Windows Phone devices.
I am not sure sure if Windows Phone would lead the market by 2015 as predicted by Analysts over Pyramid Research. Android has already got a 2 year early start to the process of moving from high end devices to mid / low range devices. If Nokia manages to do what it says, then it would be very much possible to see volume mid range devices from Nokia with the Windows Phone platform before the end of 2012 enabling Microsoft to penetrate the market further. But still they would have to do a lot of catching up in terms of unit sales to actually lead by 2015.
What do you think? Post your thoughts in the comments below.