Analysis

Microsoft’s Windows Phone Conundrum in India

With Google (NASDAQ:GOOGL) asserting more control in the entry-level segment with the launch of Android One, the budget handset segment is poised for another major change.

Microsoft (NASDAQ:MSFT) has fared incredibly well in this segment with the Lumia 520, which is the software (and now hardware) maker’s most successful handset. However, the limitations of the Lumia 520, mainly in the form of 512 MB RAM and the lack of a front camera, combined with the fact that there are several Android-based alternatives that offer a better feature-set for a similar price mean that users are gravitating away to other ecosystems. With that in mind, Microsoft is set to change its device portfolio in the country, focusing on the budget segment more aggressively.

Renewed focus on entry-level segment

Under the change, the Asha series will be discontinued, and Microsoft will introduce Windows Phone based hardware in this price segment. The most affordable Windows Phone device, the Lumia 530, currently costs $140 (Rs. 8,500) in India, which deters potential buyers looking for something less costly. Android One handsets, for instance, are priced at a much more aggressive $104 (Rs. 6,300).

There hasn’t been a Windows Phone device in the $80 (Rs. 5,000) to $125 (Rs. 7,500) segment, but all that is set to change in the near future. Microsoft is not only going to provide more affordable Windows Phone handsets, but the manufacturer is also looking to launch a series of feature phones under the First branding. The First series of devices will allow first-time buyers access to the internet and other basic features in a device that costs $40 (Rs. 2,500) to $80 (Rs. 5,000). Furthermore, Microsoft has mentioned that it is actively working with carriers in the country in launching 4G-enabled versions of its handsets, like the Lumia 635. 4G services are about to go mainstream, and the introduction of 4G devices in the entry-level segment will serve to boost device sales considerably. 

While the suggested changes sound interesting, it may be a while before we see them go into effect, as Microsoft’s head of sales Chris Weber mentioned that it might be 12 to 18 months before the new portfolio of devices can be rolled out. With Android One set to gain more and more momentum, there is a likely possibility that Microsoft will have not much to contend for in this segment if it does not offer a wider selection of devices to users, and soon.

Microsoft has fared moderately well in the Indian market thanks to a loyal userbase, but there are inherent challenges the manufacturer faces. The Lumia 530 has a lot of significant drawbacks when seen against devices available on other ecosystems, like the lack of a frontal camera, and the fact that the 512 MB RAM is a limitation on the content that can be installed on the device. In fact, there isn’t much that has changed in the Lumia 530 and the Lumia 630 from the Lumia 520 and the Lumia 620, and Microsoft was called out for not making significant changes to either handset. Android devices, meanwhile are getting much better in terms of hardware and value for money. This isn’t a factor that is limited to the entry-level segment alone, as Microsoft is faced with similar issues in the mid-tier category.

Mid-tier segment also getting bolstered

The launch of the Lumia 830 for $440 (Rs. 27,000) in India will be the introduction of Windows Phone 8.1 in the mid-tier segment in the country, and the manufacturer is also set to offer the Lumia 730 in the country later this year. While both devices offer new hardware as well as software-based features, there is a glaring deficiency in Microsoft’s product portfolio.

This year, Microsoft’s offerings in the mid-tier segment include the Lumia 730 and the Lumia 830, with the Lumia 830 touted as the flagship for the year. That means that the highest priced Windows Phone device in the country will be the Lumia 830, and while users looking for more power will find an alternative in the 6-inch Lumia 1520, there isn’t a flagship-level device that can go head to head with high-end Android devices.

That void is largely one of Microsoft’s own creation, as the manufacturer failed to bring the Lumia 930 into the Indian market. For reasons unknown, the device was delisted from the Indian website, with no mention as to whether it would make an official debut in the country. Overheating issues from several users in countries where the device was available could be the reason for Microsoft deciding to not launch the device in India, but the fact that there isn’t a Windows Phone device in the $490 (Rs. 30,000) to $650 (Rs. 40,000) segment is a huge drawback.

There needs to be a flagship device on every ecosystem that highlights the best features that the platform has to offer. Strangely enough, this year that honor belongs to HTC, which launched the One M8 for Windows, a device that features the same hardware as the One M8, but runs Windows Phone instead of Android. Failure to launch a device in the high-end segment does not mean that such a device does not exist. There were several rumors earlier this year that Microsoft was working on a high-end device with an innovative 3D Touch gesture-driven interface. The technology was said to be based on the Kinect sensor, and Microsoft was rumored to officially unveil the device, which was internally codenamed McLaren, sometime in the month of November.

Microsoft did mention as to why it discontinued work on its 3D Touch handset, but if the software maker wants to have any chance of continuing its strong run in the Indian as well as other global markets, it needs to have a wider selection of devices available. With Nokia’s mobile division fully integrated within Microsoft, the software giant needs to set its sights on grabbing a more substantial market share in the mobile segment.