Windows Phone isn't dead, but it needs a new reason to live

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After four years of uphill battles, Windows Phone appears to be reaching its peak.

IDC recently estimated that Windows Phone shipments fell to 7.4 million units in the second quarter of 2014—down from 8.2 million a year earlier—even as Android and iPhone shipments increased. As a result, Windows Phone’s Q2 2014 market share dropped from 3.4 percent to 2.5 percent year-over-year.

The news has led some pundits to declare that Windows Phone is on life support, while others have expressed optimism that Microsoft can turn things around. But whether you’re rooting for Windows Phone or not, it’s hard to see Microsoft’s fortunes improving without a clearer turnaround plan.

The short-term strategy, as outlined by Devices group head Stephen Elop last month, is to try and sell lots of low-end Windows Phones in emerging markets, where the most growth is happening. In addition to producing more of its own low-cost handsets by converting future Nokia X devices into Windows Phones, Microsoft will allow cheaper handsets by dropping Windows Phone licensing fees.

But as IDC’s numbers show, Windows Phone is no longer growing along with the low-end market. Android is likely winning because of its richer app ecosystem. And as Google rolls out its plan for sub-$100 “Android One” handsets, it’s only going to get tougher for Microsoft to stay afloat. Simply producing more low-end phones won’t be enough.

What about the high end? Again, we’ll likely see more devices on the market, as Microsoft has made it easier for vendors to load Windows Phone on handsets originally designed for Android.

Still, there’s no guarantee that wireless carriers in the lucrative U.S. market are eager to sell these handsets. Reports have shown that customer service representatives steer people away from Windows Phone at every opportunity. That problem has plagued Microsoft for years, and it speaks to a larger problem: Android and the iPhone do such a good job of addressing most people’s needs, it’s not really clear who needs Windows Phone.

If there’s any reason to be optimistic about Windows Phone, it’s that Microsoft itself has a clearer vision for the kind of company it wants to be. When Elop says Microsoft hardware should showcase “the finest of Microsoft’s digital work and digital life experiences,” he’s hinting at devices that are superior for productivity because of how they integrate Microsoft services. Perhaps someday, Windows Phones could appeal to that niche in the same way that Microsoft’s Surface Pro 3 does.

But right now, all we have to go on are vague promises, and a strategy that seems to favor a low-end market that’s suddenly slipping from Microsoft’s grasp.

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