Microsoft & Nokia Can Carve a Niche in Mobile, But Wearables Is the Next Battleground

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Microsoft + Nokia still has room to grow in the smartphone market, but perhaps the software giant should focus on the future of mobile: wearables.

Originally, I intended to write a thought piece bashing the Microsoft-Nokia deal. On the surface, Windows Phone feels much like BlackBerry, whose moves I correctly predicted were too little, too late.

But as I did the research, I realized that the same isn’t true for Microsoft, at least abroad. While market share of the Windows Phone has stagnated between 3% and 4% in the U.S., Microsoft’s mobile OS is making positive gains abroad.

In the UK, its market share has doubled to 9.2%. In France, it has tripled to 11%. There are still millions of people with feature phones looking to upgrade, and they still can be swayed away from choosing Android or iOS.

It won’t be easy, of course, and it may ultimately be a futile effort on Microsoft’s part. You can also argue that Microsoft didn’t need to spend the money on Nokia, but it has so much cash to spare that a few billion to improve development speed and bring phone development in-house makes some amount of sense.

I don’t believe Microsoft can triple its market share by 2018, but I do think it can grow a respectable niche. It’s not going to get any easier though, with great phones like Google’s MotoX and the upcoming iPhone still superior in terms of apps and core features. Microsoft will have to find a proprietary way to differentiate from the competition that it hasn’t found quite yet.

The Next Battleground

The battle for smartphone dominance may not matter in five to ten years though, because I believe a new battleground will soon emerge: wearable tech. Yes, I am talking about smart watches and Google Glass. While the technology today draws curious stares and makes you look like a cyborg, it will vastly improve to the point where we will wonder why we actually carried around bulky computing devices in our pockets.

Will wearable tech look like Google Glass in a decade? Probably not. And that’s why Microsoft still has an opportunity to dominate by creating a compelling product that doesn’t look like anything else on the market.

Microsoft can no longer dominate the smartphone market. The best it can hope for is a few percentage points of market share over the next decade. In fact, Microsoft risks missing the next big trend by focusing on a few percentage points of a market that, several decades from now, will probably not exist.

That’s the beauty of technology — it changes so quickly that new opportunities present themselves often enough for a company like Microsoft to turn their fortunes around.

Ballmer is being coy about Microsoft’s plan for wearables, but we can only hope the company is taking wearable tech seriously, because if it doesn’t, it will end up playing catchup once again.

Image courtesy of IGN