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Ballmer sees an “upside opportunity” in having almost no market share with Windows Phone

Steve Ballmer
Steve Ballmer (Image credit: Windows Central)

This evening, Microsoft is hosting their 2013 Financial Analyst Meeting, addressing shareholders about the current status of the company and its future. Most of the discussion, which is ongoing as we write, has focused on cloud computing, Xbox, Windows and all of Microsoft’s services.

Outgoing Microsoft CEO Steve Ballmer took the stage within the last hour and elaborated on many of these areas, including Windows Phone. While not a lot of time was spent on the growing division, Ballmer did of course talk about the recent Nokia purchase.

Below are Ballmer's verbatim comments:

“Mobile devices. We have almost no share. I don't know whether to say that with enthusiasm or kind of uncomfortable tension. But I'm an optimistic guy. Any time we have low market share sounds like upside opportunity to me. We're paying to do it all day every day…It's getting after it and really making sure we deliver the kind of revenue and gross margin upside that's certainly there.The Nokia deal is a lot of things. One of the things it is, is a way to make sure we can capture the gross margin upside because we're making most of the investment today, that we need to make even owning Nokia. We're very excited to have a chance to capture the gross margin upside...”

The admission by Ballmer is fascinating if only because Microsoft appears to be facing the reality that Windows Phone, while promising, still has quite a long way to go before it is a profitable and successful business division for the company.

The Nokia deal should help streamline the manufacturing of Windows Phones by knocking down walls between hardware and software development teams. There should also be “fewer secrets” as Microsoft’s Joe Belfiore recently mentioned about the deal.

Nokia has recently taken the lead in Russia over Samsung, Windows Phone has maintained a number two status in India and the OS has experienced explosive growth in Mexico. However, market share in the US has remained below 5% despite an aggressive campaign through AT&T, Verizon and T-Mobile. Overall, shipments for Windows Phone are up 77% year over year.

Will Microsoft be able to pull it off? In theory they have everything they need to make a successful comeback in mobile. But there are a lot of ‘ifs’ and ‘buts’ that could affect the outcome for Microsoft. At the very least, they seem keenly aware of how much work is left to do.

Source: Microsoft

Daniel Rubino
Executive Editor

Daniel Rubino is the Executive Editor of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft here since 2007, back when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, Microsoft Surface, laptops, next-gen computing, and arguing with people on the internet.

203 Comments
  • Don't give up.
  • So inspirational!!
  • The upside is that you can't get any worse marketshare
  • Not true. We could be blackberry.
  • We could be iPhone and have everything to lose. Which after their latest hardware seems sooner then later.
  • I'm confused. If Apple has everything to lose and it happens soon...What is then left to lose later?
  • I agree they can't give up and will win eventually.  But that's a ridiculous comment Steve.
     
    Well, I'm flat broke, my house was foreclosed, and I'm bankrupt.  But I feel great because look at all the upside earnings potential in my future :/
  • That would be true Spicymikey if MS were in "your" situation, broke, but MS is the opposite of broke. If you're broke you have little tools to turn the tide. Analogy fail.
  • Maybe, but I think you missed my point.  I'm talking about the ridiculous notion of being happy/enthusiastic about the idea of having almost no market share because, as Balmer said, all the great upside potential.
     
    Again, it's like being broke and being happy because of all the upside potential.   In either case, both parties are just lying to themselves, or trying to lie to everyone else, to suggest its a good thing.  It's not good.  It sucks.
  • So Balmer is the glass half full guy, and you are the half empty guy.
    Which of you is Microsoft's CEO again?
  • No not really. Bad metaphor. In competition you should never be happy with last place. I know what he was trying to say but it sounded stupid. It was an unscripted comment and I suspect he regrets it. this is a bad situation he has out this company in. He should not be joking. He should be up there saying "this is unacceptable". He should be saying "we need to do better". I'm not a Balmer hater but this is just one more example of how he's just a C+ grade leader. He would be great as CEO of Ford or GE but he's not "urgent" enough for this company. THATS what I'm saying. Everyone stop being fanboys
  • I don't think anyone's being a fanboy, your analogies just didn't quite pan out... What he's saying is that it's a good opportunity to capture market share. That's a true statement and not a joke in any way.
    Basically, in business it's typically easier to capture market share when you have very little and you have a few other competitors that hold most of the market share.
    It doesn't make it good, and I don't think that's what Ballmer was getting at. He's just being optimistic and pointing out the upside of the situation. The company is obviously aware that they're not where they want to be.
  • Is that a trick question....
  • I think maybe you missed his point.. he got the point you were "trying" to make... just the way you went about it was a fail.
  • Maybe I did.  If so I'm glad.  He should never be making light of this situation.  It's war.  Be serious about your failures. 
     
    Again, Balmer seems like a good CEO, better than average.  Just not the right guy for this company at this time.  The Board finally saw it and forced him out.   Now they need to find a wartime CEO like Steve Jobs, or Andy Grove, or even Bill Gates, because these next 5 years will possibly determine the role MS will play into the future of computing.  
     
    The enemy is at the gates and threatening to overrun your base camp (the Windows OS) which virtually everything that defines Microsoft is all about.  They have to get this right.  There can be no more mistakes or shortsighted leadership.     There needs to be more urgency.   Unfortunately as long as Balmer (as good as he is) remains in control, Microsoft will continue to be run like a company who thinks they are in the lead with time to spare (like they were 10 years ago) rather than from behind.   That is what Elop did so well with Nokia.  He changed their perspective of themselves.  MS needs that new perspective to have any chance of fighting successfully.  They need to fight like their survival depends on it, not make light of the situation.
  • I agree completely. That's A LOT of missed opportunity! Cheerleading has its place but people come for the game and not the cheerleading. 
  • I agree with this and almost all of your comments above. Thanks for sharing your opinion!
  • Comprehension fail. The analogy compares Microsoft's phone market share to being broke, which isn't unfair.
  • I'd like to say the same. Windows Phone offers something unique and simple compared to Android and the newly-reskinned iOS.
  • No. That MUST NOT give up. If Windows Phone dies, that leaves me the choice of what??? Getting a virus phone or being an iSheep? No way I can deal with that dilemma....
  • At least iOS is reminiscent of WP now... That could help.
  • It's been almost 3 years since WP7 came out. I hope, soon, their market share increases, to at least 10% in the US.
  • US smartphone owners are already over 65% of all mobile phone users. There is very little room to manuever except with existing owners. Outside the US there are lots of people moving to smartphones everyday. Analysts predict 1+ billion new smartphone users in the next 2 years. Thats where Microsoft will grow marketshare. If the rest of the world adopts it, the US will hopefully follow.
  • If i was ms i would be tempted to just forget the us market. Still sell there, but you know, just stop caring. WP is getting big in Europe, its massive in south America and is poised to smash India. Screw the us market and there "we only buy apple". Who needs 300million apple fans when you have 1.5 billion Nokia fans.
  • I'm in the states and I can't help but kind of agree sadly. All the promotions they offer here in the states should be directed to where their market share is.
  • I third that notion. Despite all my high school peers being underwheelmed by the iPhone 5S, tons of kids are still planning on upgrading to it, and everyone has been going bat shit crazy over iOS 7 (which, despite me /showing/ people how it copied Windows Phone, obviously, no one cared, and said that this was the "Android Killer.) It seems most people just aren't rational in supporting their OS choice. If you can give me a valid reason for choosing one OS over the other, ok, great, awesome. I can respect that, *AS LONG AS YOU GIVE A VALID REASON(S)*. I hate people who say they'll buy one product over another, "just because." Don't buy something just to conform, buy something that expresses your uniqueness and appeals to you. If that happens to be Apple or Android, awesome! Just so long as you have some legit reason for doing so. Sadly, most people in the US don't seem to grasp that concept, hence why Apple is so popular here.
  • Yep. Most of your HS friends are followers. That's most of the world really. Don't follow the crowd. Think for yourself and make decisions based on facts and critical thinking. It will serve you well in the second act of your life, which is closer than you think :)
  • "Don't follow the crowd. Think for yourself..." The new slogan for windows phone.
  • Haha, I love it!!
  • Love it, much like Apple's famous "Think Different" campaign. Well, they stole our OS, so let's steal their slogan.
     
    Much more fitting for Windows Phone anyways. That's one reason I love it, Windows Phone mirrors my view of my personality in that it's unique, fun, a tab bit quirky, and overall: Different. 
  • "Innovatively Deceptive" -- the new slogan for Apple.
  • Sad part is, if they made that slogan, people would /STILL/ mindlessly buy it 'en masse.
  • You could suggest to MS to turn that around to "Deceptively innovative" to get their new slogan. Not that it is true.
  • +1...me likey!
  • yes this would be a good thing to do I totally agree.  No one wants to be called a fool.   It's apowerful motivator to make people think and take actiion.    Samsung did it last year with their ads targeting drone/stupid people standing in line to buy the iPhone4 with its "new" features which were really old news.   It works. 
  • Why does anyone need to justify to another how they choose to spend their money? If someone wants an iPhone just because, then let em. Same for Android, WP, BB or whatever it may be.
  • Fair Enough
  •            Because this herd follows its shepherd even if he's dead.Iphone when it first came out probably was the best phone of the day,but in time it created a social status.It was and for some still is "cool" to own and be seen with an iphone,For these people it doesn't matter that there are other options outhere (phones and OS's).
                  LOL ,yes ios7 is a killer,it will kill itself,it won't affect a bit android or wp.I am not surprised that a lot of americans just jump to buy the newest iphone,they also jump in 2 year contracts thinking that they get phones for 99 or 199$ when it is obvios that they will pay a lot more for their phone in those 2 years,so there is a lot of differences between american and other markets.
  • While I agree with you and it does annoy me that so many people buy Apple out of pure ignorance, the thing is, it probably is the best phone for them nonetheless. Until WP gets all the apps iOS has, it doesn't matter that the OS itself is easier to use.
  • They can't give up on the USA.  It's almost 25% of the entire worlds economy.  To put it in perspective, the #2 economy, China, is HALF the size.  Russion is like 1/10th.  They are not only #1, there's no one even close to them.  It's like Secretariat in the '73 Belmont Stakes.  To say he came in first is an understatement.  He was crossing the finish line when the rest where still coming out of the clubhouse turn :)
     
    So no, they can't give up on the US market.  It's the center stage for marketing products.  They have to win here.  In fact, they need to double down not give up.
  • Gaining popularity in the rest of the world will go to great lengths in helping Microsoft. The US is a tough shell to crack, Apple has dominated here for years, it's only been very recent that any Android manufacturers have finally managed to break through and gain some form of traction in the US. Microsoft would be much better off in focusing all ad campaigns elsewhere. Obviously, they shouldn't stop selling here or cease advertising altogether, just not spend so much on ads. Microsoft can then secure the future market, that is to say: everyone with a feature phone looking to get their first smartphone. As we've seen, the Lumia 520 is a popular choice amongst that crowd. If Microsoft and Nokia can push that device in key developing markets, they can get people hooked on Windows Phone and ensure a continuous revenue stream (much akin as to how Apple gets away with such meager annual upgrades). Once they get the rest of the global market secured safely within their grasp, then it will be time to launch the campaign to penetrate the US. Don't get me wrong, the US is a key and highly influential market, it's just not the best course of action for Microsoft at present. Microsoft has tons of potential in the upcoming smartphone boom, they need to quickly position themselves to be ready to intercept all those upgrades, or else lose them to the Android crowd. Blegh.
  • I agree.
  • @Kellzea +1520
  • I strongly agree with you, it boggles the mind why they MS goes that far! AT &T exclusives, first to get the latest phones, e.t.c, yet the majority in other country just wait & wait for the handset, when apple releases a another version thats when they rush to make it available to the rest of the world becoz they would be afraid that customers would end up buying  iphones,
    MS please, know where your bread is  buttered.
    They "FOLLOW THE CROWD" NOT on buying the phones ONLY but on every thing they do. they have been conditioned to do that so that they can be easily manipulated, and its not easy to change that.
  • In the Us they need to get more of them out on the low end carriers and it would be huge if they can get the L625 and L520/521 out to that older people carrier(forgot it's name). and have ad's in the AARP news letter
  • MS said during the Nokia announcement that the goal for WP is 15% worldwide market share by 2015 if that tells you anything.
  • End the exclusivity esp. In US this will help
  • Yeh, and adding to that excluvity shity deals, I dont understand why US carriers have to have unique phones, like 521, 822, 928 and so on.. What's the point? They could just get the exclusivity to a specific phone already made.
  • That fault lies more on the fact that Nokia is (was) desperate for cash to alleviate the cost of advertising, in tandem with the fact that carriers are still convinced exclusive devices bring in customers. We all know that isn't true (especially when Nokia remakes every phone for every carrier), but as we know, carriers aren't the most rational bodies around. Also, Windows Phone doesn't have a large market share yet. Apple can bully the carriers into submitting to what Apple wants, because all the carriers know if Apple doesn't get its way: it will instantly leave the carrier. And should that happen, it will be instant suicide for the carrier, as consumers will leave in droves seeking service for their beloved iPhones. It's sad, but true. Hence why iOS remains a perfect gem on all carriers, because Apple has enough authority to dictate they may never touch it. Samsung can also roll out their premier phones in relatively one piece, because as we know, Samsung has been catching on lately, so they're only (mostly) free from the tyranny of the carriers. Meanwhile, should Nokia try to play hardball, the carriers will just leave them out to dry, so Nokia isn't exactly in a strong position (and also why we're at the mercy of the carriers for software updates). Hopefully, with the upcoming acquisition of Nokia by Microsoft, Nokia will finally have access to the resources (aka: $$$) required to advertise effectively on their own. Sadly, the market share problem might still be an issue, but maybe being directly backed by one of the world's largest companies, that also possess the fastest growing mobile OS globally, might help discussions at the bargaining table. Still, for the time being, it seems we're just going to have to take what we can get, and deal with carrier exclusives.
  • There is also still a sales rep issue as well. at&t doesn't seem so bad but t-mobile and Verizon still need training. My friend had me go with him to get the 928 the day it came out because he was sick of Android and the lady begged him to get the S4 instead because "over the past few months everyone who had bought the 928 returned it". I called her out on it and so she resorted to saying he wouldn't be able to get on facebook or watch Netflix if he got it. He knew better and still got it but how many people are still being mislead by sales nonsense.
  • That's hilarious, because Windows Phone was the first to get Netflix in 2010. Netflix was built on Silverlight so it was an easy migration. These sales people are horrible. People should start recording them and embarrass them on YouTube. Its quite pathetic.
  • Yeah, it's pretty awful. AT&T has improved greatly from the Lumia 900 launch (I still remember them trying to sell me an iPhone 4 because the Lumia 900 had "antenna issues." Apparently, the sales rep forgot about Antennagate). So while AT&T has come a long way, they could still use improvement (the sales reps will ONLY talk about the Lumia 1020's camera. While that's a killer feature, most people won't care unless they know it also acts as a solid phone). But yeah, if Verizon and T-Mobile are anything like AT&T's Lumia 900 launch, Windows Phone growth won't be happening anytime soon, because poorly trained sales reps will be misleading consumers. It's sad, really. I think every carrier's store should have an equal number of sales reps trained to each sell a specific OS. That way, everyone store will have at least one guy pushing iOS, at least one guy pushing Android, at least one guy pushing Windows Phone, and at least one guy pushing Blackberry. Obviously, each rep will be trained to relentlessly push their own OS, and explain the pros about it. Then they'd point out the cons in all the others. I feel this would create a balanced playing field and allow consumers to get a fair idea about each operating system, and make a fair choice from there.
  • Mind while android and ios selling like crazy , i love wp n im a fan but dam ms is slow , theres so many little features that we missing ,hope wp8.1 finally take care of all of that.
  • This is a serious question. What features do you miss? Not trolling or having a go. Genuinely interested. Personally all i miss is good audiobook support, and maybe torrents. But mainly just audio book support. Cant say as i "want" for anything else really.
  • I have plenty in mind. Just to name a few, orientation lock, message / email notification tone, ability to attach more than one doc to an email, ability to view photo details (more than just the month and year), ability to rename photos, ability to group photos into folders, ability to attach videos to 3rd party apps.
     
    Don't tell me that it's coming. Tell me about it when it's finally here. Until then, all these are still valid.
  • There are apps that show photo details, and you can make as many pic folders on SkyDrive or Facebook as you want. You can even make a group and add photos to that to make the seporate, but yeah, would be nice to move the "saved pics" about a bit.
  • Well, I don't have Facebook and I don't use SkyDrive for my photos. Why can't the phone have it? It's something very basic. Also, I need an app to actually see photo details? This is absurd!
     
    MSFT is really dragging their feet with the updates.
  • I'm not sure if this has been addressed yet, but a different volume setting for ringer and music would be nice and an auto download for music when using bing to get a song title off the radio. I'm subscribed to zune music and that would be a nice little option.
  • Make it has the Same capability as W7 :P
  • There are audio book apps and torrent apps for Windows Phone!
  • There are yea, but not ones that i can drag and drop to. I have to upload my audio books to SkyDrive and download them to the phone. Its a pain. Ill try the torrent apps
  • Yep... Actually, we only need a way to open it, hence: File Explorer. I like the way I search for the files to open them, not using the app first to then open them.
  • Get wptorrent pro. Its pretty good and downloads at full speed.
  • Ill give it a go
  • I'd like to be able to do something I could do even on my old Pantech "dumbphone" from 7 years ago; use custom tones for ALL my notifications, not just my ringtone. Also, I'd like to be able to block certain numbers from the phone itself, that was something my old Motorola Razr was even able to do.
  • blocking is possible
  • Since Amber, you can block certain numbers
  • Not many IMO either. Just needs custom notification tones and then its perfect in my eyes. Although the X for closing apps is nice as well.
  • Tell you what I miss. Reliable and mature podcast apps (XBox Music is neither nor are the other apps I have tried), custom tones for messaging and email, bookmark synching and organization features that are equivalent to the competition, and then possibly some Google apps (which I would like but can live without). Also, I wish that some of the exercise apps weren't missing many features available elsewhere, some are simply things that need to be developed in what are currently immature versions of the app -- Runtastic is what I use -- other features are OS limitations such as low power Bluetooth support. I love windows phone 8, but there are legitimate things lacking.
  • Podcaster and i podcast are pretty good podcast apps. I'm fat though, so cant help you with fitness apps im sorry
  • Podcast Lounge is the best podcast app for wp8 right now!
  • I like Podcast Lounge but until I have GDR 2 it cannot automatically download podcasts.  Also, I wish that it would give me the option to sort my podcasts by the date that they have been updated.
    Once I have GDR2 I will probably be happier.  I used BeyondPod on Android and Downcaster on IOS and they are both more mature.
    Like I said though, I do love my Windows Phone.  I am not a trolll :).
  • deleted duplicate
  • Seriously...there is something that I see WP have that makes it a contender: its own apps. I have WELL over 75 apps on my Lumia, some of which you can't get in iOS OR Android. As for lack of apps? Sure some are missing...but it only gets better week after week. I LOVE my 928. I don't have to have the bloatware carriers install on Android, and I find I DON'T NEED APPS to do what I need to do! Facebook, Twitter, social media, email, text, messaging. ALL that is done right within WP8, all without needing to use an app. It is amazing!! Microsoft is the sleeping beast, and one day, it will explode. I have firm belief that will happen ;)
  • I see a bright future with this platform.
  • I do too man , but the need to step it up from wp8 to wp8.1 is gonna take them 14 or 15 month thats a lot .
  • Me too.
     
    Exciting stuff coming with GDR3 for the holidays and then WP8.1 early next year.
     
    I think it's important to remember the audience that Balmer is speaking to.  They care about financials.  So Balmer is putting on his salesman cap to pitch things in a way that that audience will like.
  • Nothing exciting about GDR. Still waiting for orientation lock on this platform and volume control.
  • Love my windows phone!
  • WP needs a skin pack or theme pack badly.
  • Hell no
  • Why does everyone care? If you don't want to use the feature, then don't. I don't see why we should discourage features that are completely optional.
  • no.....NO!
  • I agree that we need a little more customization. Nothing major, but like a wallpaper behind the tiles (like w8.1) would be pretty cool.
  • This
  • I think that will not look good. Because space between tiles on WP is really small
  • Why? You could still retain the Metro or Modern UI and all the pivots, just make a skin pack, maybe a Halo skin pack or theme. Maybe a glow under each tile as you press it, maybe a background for the messaging section. There are visually no difference from 7.8 to 8. Your average customer sees the exact same screen on every WP. Live tiles has nothing to do with some customization. It will come to Windows 8. The sooner Microsoft releases a customization skin or theme pack is when WP will take off. Not the hardware. Hardware upgrades are perpetual, customization and OS aesthetic maturity hasn't been. The only aesthetic upgrade has been the shell (hardware). You can thank Nokia for that.
  • Yes I love my WP but what is wrong with having more customization?..that's why android sells so many phones because people nowadays dont like to feel limited...and lets face it we are limited on wp..there is nothing wrong with more options at all...people can say what they want and in my opinion i would live to be able to change the layout& background wallpaper...because it gets really boring having only two options of background color.
  • Switch to Android. ;)
  • Are you actually saying it would be bad to have optional themes or skins for the home screen that wouldn't affect people who don't want to use it in the slightest? The code is already essentially there - we can choose between dark and light. If Microsoft doesn't want to put in the resources, I'm sure other developers would do it for free if Microsoft would give them the necessary libraries.
  • No.
    switch to Android.
    keep WP clean.
  • Two words, Metro Aero.
  • 7 ate 9
  • Why was six afraid of seven?
  • Delete comment here . . . .
  • I think with the recent buying of nokia, ms now has the ball, no pun intended, in their court and can now add more and better features to the WP lineup.
  • That will be true if they start leaving other OEMs in the dust. Balancing between allowing external OEMs to get inside testing and giving their Nokia division all of the goods needed for success will be tentative. Walking that line may mean we're not in that much better of a place. Hopefully, MS is highly competitive and does whatever is necessary for MSNokiaWhatever WPs to take off big time and start really gobbling some market share, making WP profitable and solidified in the market.
  • Every time a buddy of mine goes into an att store they always talk him out of buying a wp8 Ms needs to attack the stores as well
  • Yeah lol they never recommended at all , that's killing them like crazy and mostly because of the apps , they always say , wp is nice and smooth but no instagram , no this no that .
  • They sure do. The Best Buy near me hasn't shown a plugged in Windows Phone model for near six months.
  • I don't blame them though. I like Windows Phone and I hope it succeeds because overall I think MS is in a great position to build an awesome ecosystem. But I'd never recommend WP to anyone because it's not going to cover most people's needs and I don't want to hear well it doesn't have Siri or Google Now or this app or that app. So if I were in sales I wouldn't recommend it either unless you really like the MS platform and that's probably not what most people come into the store seeking.
  • Actually, here in Manchester CT, the guys at the store "secretly" carry Lumias and still direct people to Android. They tell me they are WP guys but are told to promote Galaxy and similar toys.
  • I remember about 3 mo after the 920 came out they didn't even have a real device at the local att it was a paperweight essentially I guess to see what it looks like and how heavy it is
  • I went to the mall last week and walked up to a Sprint kiosk to see their new Windows Phone. I didn't see it displayed so I asked a rep if they had one on display. He started looking around like he had never been asked that before and finally reached down from under the counter and pulled out a box with a new phone in it. He took it out and let me look at the HTC. It was nice looking but hadn't ever been tuned on. Next we'll hear that familiar tale from Sprint about Windows Phones not selling.
  • Unfortunately many sales people, not all of course, are not very well educated about the products. I'm a WP guy and when I go into stores and ask them about WP, they just give me a bunch of untrue information. They turn people away from WP for literally no valid reason. Someone needs to discipline them. I think it's great that there're going to be Microsoft stores in Bestbuy. At least these guys will be properly trained on the products.
  • I think the Ben guy from the Windows phone challenge ads, needs to go to stores and punch these kind of people in the face. God knows how many people ended up picking an android phone just because the rep doesn't know anything about the WP ecosystem. Really sad.