Windows Phone claims third place in the smartphone wars, but challenges await

Windows Phone is riding high(ish) right now, but Microsoft will have to combat a surging BlackBerry 10 to gain traction in carrier stores

Microsoft's Windows Phone may be struggling to gain a foothold in the U.S., but the software giant and Nokia are starting to see results on a global scale: Windows Phone was the third-most popular mobile smartphone operating system worldwide between January and March.

That doesn't mean it's on the brink of mainstream success, however. Microsoft's two-and-a-half year old mobile effort claimed 3.2 per cent of the worldwide smartphone market, jumping ahead of BlackBerry at 2.9 per cent, according to market research firm IDC. ( PCWorld and IDC are both owned by International Data Group.)

Although Windows Phone may have an edge over BlackBerry worldwide, the battle for the US is still being won by BlackBerry.

Nokia in April said it had shipped 5.6 million Lumia phones worldwide between January and March, but only 200,000 ended up in North America. Previous quarters weren't much better for Nokia's stateside successes. Windows Phone currently accounts for just 3 percent of the American smartphone market well behind BlackBerry at 5.2 per cent, based on the latest market share numbers from metrics firm comScore.

Nokia or bust

Wait, why are we focusing so heavily on Nokia when we're talking about the entire Windows Phone market?

IDC's report makes it clear that when it comes to Windows Phone, Nokia is the only smartphone maker that matters. The Finnish company accounted for 79 percent of all Windows Phones shipped during the first three months of 2013, a statistic correlated by AdDuplex, which tracks usage of Windows Devices.

There are other Windows Phone makers such as HTC and Huawei, but they are more focused on providing alternatives to their "signature Android devices" than pushing Windows Phone, IDC said in its report. Nokia is all-in on Windows Phone.

While Windows Phone may have leapfrogged BlackBerry right now, Microsoft's platform will have some challenges to maintain its third-place edge.

BlackBerry shipped one million BlackBerry 10 devices in the first quarter of the year alongside a number of low-priced BlackBerry 7 legacy devices, IDC said. That may not be a lot of phones, but it's a better than expected showing for the BlackBerry 10 debut. With the company's new BlackBerry Q10 now rolling out in addition to the touch-centric Z10, BlackBerry's popularity may rise during the latter part of the year.

BlackBerry also has the momentum in the all-important third-party apps race. Windows Phone may have a slightly larger catalog than BlackBerry, but with advantages like BB10's Android app emulation engine, BlackBerry has an edge to bring popular apps to its platform first. In late March, BlackBerry executive Martyn Mallick, who heads the company's global business development business, said about 20 percent of BlackBerry's catalog were Android app ports, according to AllThingsD.

Swinging the momentum

Beyond the apps race, Microsoft will also need more manufacturing partners to lengthen its reach beyond just Nokia Lumia phones, says Ramon Llamas, research manager with IDC's Mobile Phone team. He also notes Microsoft needs "a marketing campaign that not only highlights the platform, but the differentiating features," as well as a way of "incentivizing sales people away from the Android/iPhone status quo to Windows Phone." (Sounds like a Microsoft-made Surface phone could help.)

Better marketing and a retail sales push are themes we've heard time and again from analysts and industry insiders about the future success of Windows Phone.

"The most important factor is whether carriers are pushing your platform," Charlie Kindel, former Windows Phone developer experience chief and current Google employee, told us last June. "Up until now [June 2012] carriers have not been selling Windows Phones."

Earlier in May, Gartner analyst Carolina Milanesi told us something similar when we took a look at the prospects for the Nokia Lumia 928 on Verizon.

"How much of a difference [being on Verizon will make to Nokia] will depend on the level of commitment Verizon shows when it comes to advertising and in-store placement," Milanesi said.

While BlackBerry and Windows Phone battle it out for third place around the world, Android and iOS continue to be the top smartphone choices for most people on the planet. Android and iOS accounted for 92.3 percent of all smartphones worldwide during the first quarter of 2013, according to IDC.

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Ian Paul

TechHive (US)
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