Windows Phone: while it's not the end of the road, it is

In 2011, it all started with a memo for Nokia and Microsoft. Today, it all seems to end with a memo.

After acquiring Nokia’s handset division for nearly $7.2 billion last year under former chief executive Steve Ballmer, Microsoft now admits this was a costly mistake with a $7.6 billion write-off and massive lay-offs that will shatter four-fifths of Nokia employees.

Microsoft CEO Satya Nadella addressed the company in a memo (read the full memo at the bottom of this article) written in the best traditions of convoluted, lacking-specifics corporate lingo about “growing and creating a vibrant Windows ecosystem”. The essence of the memo, however, is about the opposite: it is about layoffs and admitting defeat.

The reaction to it was immediate with speculations that Microsoft is about to exit the phone business altogether. It won't (Bloomberg’s Microsoft insiders claim that the company will not exit the business for at least two more years), but rather than having a conversation about the future of Windows Phone and how great could a new PureView Lumia flagship be, the memo makes us wonder whether and when will Microsoft shut down Windows Phone altogether.

I can't help but wonder: is Microsoft standing on a burning platform?

#1: Osborne effect

Back in 1983, computing was at its infancy and growing in leaps and bounds. The Osborne Computer Corporation - a firm that set on to build a personal computer to challenge the leader in the space at the time, IBM - had its Osborne 1 portable computer on sale and largely depended on the machine for its revenues. Hopeful for the future, founder Adam Osborne decided to show the media several new computers that the company was developing, but that were still far from ready for the market - the Osborne ‘Executive’ and ‘Vixen’. These two more powerful models were to deliver better specs and performance for the price, so showing them to the media seemed like a good idea to build up hype. Instead, something different happened, something as monumental as to go in the history books as the ‘Osborne effect’: sales of the available Osborne 1 stalled. Dealers cancelled orders. Sales went down to nearly zero for a few months, forcing the company to file for bankruptcy in September of the same year. It was a disaster.

Bringing up non-existent, future products turned out to damage the sales of the current devices, and that is what is currently known as the Osborne effect.

Microsoft is painting doom and gloom on Windows Phone right before the expected launch of its biggest flagship of the year

This lengthy introduction would not be of much interest unless the same story repeated in the present and near past.

The Osborne effect is what effectively brought Nokia down to its knees after newly appointed CEO Stephen Elop repeated the mistake of Adam Osborne with the then largest phone maker. The ‘Burning Platform’ memo issued in February 2011 described all current Nokia phones as a part of a burning platform, while the upcoming Nokia Windows Phones were not to be sold for another six months or more. This sent a clear message to the market: don’t buy these current Nokia phones. The market got the message right away, and it was a disaster for Nokia, as the company lost nearly half of its market share in just two quarters, a negative record for a corporation the size of Nokia.


Today’s memo by Satya Nadella sounds similar in two aspects: first, the company clearly says it is moving away from (giving up on) growing a standalone phone business, and secondly, it leaves the much-advertized push for universal apps in hiatus.

Conflicting statements and lack of clarity about the future

The whole memo not only sets a negative tone for the Windows Phone conversation, but it is also filled with conflicting statements and paints a rather chaotic picture of what’s going on at Microsoft.


Nadella starts off the memo by clearly saying that “we will take a long-term view and build deep technical capability that allows us to innovate in the future” then a few paragraphs later he argues with his own statement, denying it at its core, by saying: “we need to focus our phone efforts in the near term while driving reinvention.”

Which one is it then: a focus on the long term or the short term?

Then, Nadella goes on to say that the company will focus on three areas with phones: affordable devices, business-oriented phones and flagship phones (all in the plural). Bloomberg’s inside sources say that there will be one or two new phones in each category every year, meaning a total of six or less than six Lumia phones for a year. Given the sore and apparent lack of a flagship-grade phone by Microsoft in the past year or so, this seems like an actual widening of the portfolio in that segment, yet it is confusingly portrayed as narrowing down the efforts.

So which one is it?

A quick guide to Microsoft corporate lingo

Translation of Satya Nadella's convoluted corporate lingo to its actual meaning