Microsoft's mobile business suffered through another brutal quarter as the company sold only 2.3 million Lumia handsets, down from 8.6 million during the prior year. That marks a 73 percent plunge in Lumia sales year-over-year and follows the 57 percent drop Microsoft endured during the final quarter of 2015.
Phone revenue declined 46 percent "in constant currency," the company said. In fact, a search for the word "mobile" in Microsoft's press release announcing its earnings finds only one result – when the company describes itself as a "platform and productivity company for the mobile-first, cloud-first world."
The news isn't entirely surprising, of course, given Microsoft's strategy of focusing on the larger Windows 10 ecosystem rather than pursuing mobile more narrowly. But as Eric Zeman at InformationWeek points out, Microsoft launched two flagship devices toward the end of last year, both of which clearly have failed to gain any traction.
Indeed, Microsoft's mobile operating system is becoming increasingly irrelevant. Kantar WorldPanel reported earlier this month that Windows ran on a tiny 2.6 percent of smartphones sold in the U.S. during the three-month period ending in February, down from 4.8 percent the previous year. Windows also lost substantial ground in Germany (down 1.9 percent), Great Britain (down 1.6 percent), France (down 6.8 percent) and Italy (down 7.7 percent). And Microsoft had been making notable progress in some of those European markets over the last several years.
Microsoft has long suffered from an "app gap" between Windows on one hand and iOS and Android on the other, and developers will be less inclined than ever to build apps for the platform following the latest news. Meanwhile, rumors that it is developing a Surface phone to launch later this year continue to circulate, although hardware doesn't appear to be the company's biggest problem in mobile.
The topics of smartphones and mobile operating systems were almost entirely absent at Microsoft's Build developer conference last month. Rather than pushing its own mobile platform, Microsoft appears to be focusing more on creating cross-platform experiences and software and services that extend from Android and iOS.
The company may no longer have much of a choice here considering there's virtually no evidence of consumer demand for a third mobile OS, and carriers haven't aggressively marketed any alternative platform in years. Whether Microsoft can build a major mobile business through competing OS ecosystems is far from clear.
- see Microsoft's earnings press release
Mobile and smartphones almost entirely absent at Microsoft's Build conference
Microsoft kills Android bridge project for Windows 10 to focus iOS instead
Microsoft faces uphill climb convincing iOS and Android developers to port apps to Windows 10
Microsoft reportedly developing a Surface phone for release later next year