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Microsoft and the future of Windows Phone and Windows 10: The sky is not falling

Last week, Microsoft's "new" mission statement was leaked via an internal email from Microsoft CEO Satya Nadella. The content of that letter was quite vague in terms of specific product names and services, but it did buttress Nadella's emphasis on a "mobile-first, cloud-first" world. The communiqué did mention "productivity services, cloud platform, our device platform and our family of devices" but that is about as precise as it got.

Nonetheless, what everyone in the media focused on was the line about "tough choices". Many in the blogosphere immediately harped on the idea that Nadella was indirectly referring to Windows Phone and its poor market performance. Yesterday, however, we saw two significant announcements by Microsoft (1) A partnership with AOL and Bing web advertising and (2) They are selling some mapping assets to Uber.

Both of these are rather large shifts for the company and they seem to fit the "tough choices" label. However, it is not as enthralling as the prospect that Microsoft is about to ditch Windows Phone – an idea that literally pops up every few months for some reason.

Adding to the fire were some speculative tweets from @MSFTNerd. One of them claimed Satya Nadella and the Senior Leadership Team are "debating continuing Windows on phones and small tablets v/s bundling Microsoft services on Android as the way forward." MSFTNerd has an interesting history although to be honest he has not dropped any significant scoops in some time.

However, I am not here to question his credibility so much as set the record straight on some issues. As a side note, it would be nice for once to have multiple sources corroborating those MSFTNerd tweets. To my knowledge, this has not happened and "news" sites are running with the story despite the lack of facts.

'Cityman' and 'Talkman' Flagship Windows Phones

As of today and according to my sources, Microsoft's next generation Windows Phones codenamed 'Cityman' and 'Talkman' are still happening. Indeed, they are in the very late stages of development, and there is a reason we are hearing more about them: they are falling into more hands for testing. As projects go from select internal members to the outer rings of the process, we hear more about those plans. The final, super leaky ring are the carriers and marketing although we are not at that step just yet.

As a reminder, here are the specifications for Cityman and Talkman:

Talkman Specifications

  • 5.2 inch QHD display
  • Qualcomm-based six core processor
  • 3GB of RAM
  • 32GB of internal storage with a microSD card slot
  • 20MP rear camera
  • 5MP front facing camera,
  • 3000 mAh removable battery
  • USB Type-C
  • Cable accessory for Continuum (not included)

Cityman Specifications

  • 5.7 inch QHD (1440x2560) display
  • Qualcomm-based eight core processor (Snapdragon 810)
  • 3GB of RAM
  • 32GB of internal storage with a microSD card slot
  • 20MP rear camera plus triple LED flash
  • 5MP front facing camera,
  • 3300 mAh removable battery
  • USB Type-C
  • Cable accessory for Continuum (not included)

As I have noted earlier, those specifications for Cityman are dead-on accurate. The infrared iris scanner with Windows Hello support is supposed to unlock the phone in less than one second. The phone's design has rounded edges "like the [Lumia] 640" but thinner tapering with a chrome Microsoft logo on the back. So far, there are only two colors I am aware of: one black and one in white.

Everything I hear points to a fall release for these devices although exact dates are hard to identify at this phase. Although Microsoft could cancel any unannounced devices (see Surface Mini and McLaren for precedent), there is zero evidence that this has happened with Cityman and Talkman.

Microsoft Needs to Cut(back) the Lumia Line

The one issue I have with some of these rumors about Windows Phone is they conflate Microsoft's hardware ambitions with the platform. For instance, I could see Microsoft wanting to cut back on the sheer number of Lumia variations for a few reasons:

  1. Consumer confusion
  2. Microsoft needs their OEM partners back

The first point is well known, even amongst the faithful here. Nokia's ambitions in making Windows Phone hardware is very different than Microsoft's. Nokia created the staggered numbering system for different Lumia price points and at the time it made sense. However, instead of focusing on exquisite low, mid and high tier phones, the current Lumia lineup is a mess with unclear hardware demarcations and a flood of choices.

The recent shift with the Lumia 640 and Lumia 640 XL is an effort by Microsoft to realign their portfolio. This usage of 'XL' instead of 'Lumia 1330' is why references to a Lumia 940 and Lumia 940 XL (Talkman, Cityman, respectively) exist.

The second point is that Microsoft is not Nokia. Nokia had to compete and outshine Samsung, HTC, and other manufacturers. Moreover, they did. Nearly 97 percent of all Windows Phone are Lumias, according to AdDuplex's latest advertising data. Those numbers are great for Nokia but are bad for Microsoft. How can Microsoft convince HTC or Samsung to make Windows Phones when they control so much of their market – why even bother?

Microsoft needs to reduce their Lumia offerings and give some breathing room to their OEM partners. Think of the Surface example where there are only two crown devices (Surface 3 and Surface Pro 3) but not a whole line of Surface PCs, tablets, and laptops.

In that sense, I expect reductions on the Lumia hardware side are going forward. This cutback is a necessary step to get some diversity back into Windows Phone hardware. I would also not be surprised if Microsoft lends some engineering know-how to those partners. They have done it in the past with HTC and their One (M8) and more recently with another OEM, Hewlett-Packard, and their excellent HP Spectre x360 laptop.

Elop's Departure and Myerson's Challenge

On June 17, Microsoft announced the departure of Stephen Elop from the company. At the time, he was Executive Vice President of Microsoft's Devices and Services division that oversaw Lumia development. That department was given to Executive Vice President Terry Myerson to lead the newly formed Windows and Devices Group (WDG).

Even before Nadella's email this lineup change was speculated to mean that Microsoft is hedging on Windows Phone or at the very least, it was bad news. Mary Jo Foley, as usual, has a very good rebuttal to this idea that you should read.

Elop's departure was likely due to the poor performance of Windows Phone but Myerson taking control is a welcomed shift. Myerson went from head of engineering on Windows Mobile/Phone to overseeing Windows OS development to gaining control over all OS software (Phone, Tablet, PC, Xbox, Services, and future projects).

Knowing Myerson's background, you would think he would be thrilled about having full control over Windows 10 Mobile and hardware.

Combing Myerson's Operating Systems Group and Elop's Microsoft Devices Group to form Windows and Devices Group is the right strategy. Being able to manage the hardware development in parallel with the OS is the gold-standard for making amazing devices. Apple knows this and so did BlackBerry (before they lost their way). Even Palm had this figured out with their Treo (before they made the disastrous move to spin off the Palm OS as a separate entity).

Myerson has also done a bang up job of cleaning up Windows after the calamitous Windows 8 and Sinofsky era. Giving him the reigns to see what he can do with it makes sense.

That being said, Myerson has much ground to cover to turn Windows Phone around. However, I do not see him (or Nadella) nixing Windows 10 Mobile anytime soon.

Windows 10 Mobile is Happening

Back in May, Microsoft announced Continuum for Windows 10 Mobile during their Build developer conference. The feature is rather historic: let Windows Phone mirror its contents onto a PC. Since Windows 10 Mobile shares the same core apps as PC, these apps can scale up for larger displays with ease.

This ability found only on Windows phones is a key differentiator and a potentially strong selling point for Windows 10. Indeed, it may be the future of computing as mobile phones continue to replace traditional computing devices in the home.

If Microsoft were planning to phase out mobile it would be disastrous and poor leadership on Nadella's part to announce these plans publicly and in such a flamboyant manner only to cancel everything months later. Indeed, Microsoft execs have gone on record numerous times about flagship Windows phone coming later this year.

Even worse, abandoning Window 10 Mobile either before or shortly after its release sends a terrible message and would signal bad management. Microsoft's OEM partners would also raise an eyebrow out of skepticism: If Microsoft does not have faith in its platform, why should we?

If Microsoft were to get rid of Windows 10 Mobile altogether it severely undercuts the whole message at Build about the Universal Windows app platform. Universal Windows app would still technically apply to the Xbox One, HoloLens and IoT, but the crux of the initiative is to get the same apps to run on the phone and PCs (tablet, laptops and desktop).

Without phones, Windows 10 becomes a lot less interesting.

The Takeaway

None of the above is ignoring the stark reality: Microsoft has a nearly insurmountable challenge in mobile. However, keep in mind the goal line here: for Windows Phone to be a success it does not need to displace Apple. It just needs to gain significant market share e.g. more than 10 percent in the U.S, ideally.

Even so, with Nadella's reported reluctance of their Nokia purchase and his focus on software and services, it is not hard to imagine the company shifting long-term strategy and "pulling an IBM" someday.

However, I think we are still far from that day happening. At the very least, Microsoft will see how Windows 10 and Windows 10 Mobile perform along with those new Lumias. After all, if they see some real momentum, they would inane to retreat from that fight. They cannot, however, continue to support a strategy that cannot be turned around – they are by no means beholden to Windows Phone if it is a constant loser. In that regard, I could very well imagine "debates" within the company about strategy - all options must be on the table.

For now, I see Windows 10 Mobile continuing its iterations in the Insider program, its eventual release this fall and the arrival of those stunning new Lumias and phones from partners.

Microsoft is likely pruning back their Lumia lineup but let's not misconstrue that as lack of faith in their mobile strategy or their retreat. Instead, it is doubling down on making a few, standout devices or quoting Satya Nadella in his recent mission statement:

"Finally, we will build the best instantiation of this vision through our Windows device platform and our devices, which will serve to delight our customers, increase distribution of our services, drive gross margin, enable fundamentally new product categories, and generate opportunity for the Windows ecosystem more broadly."

The sky is not falling yet, folks.

Also, for what it is worth, I hear Microsoft Band 2 is coming in the next couple of months and Surface Pro 4 could be by the end of summer. These are exciting times people, not doom and gloom.

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.

291 Comments
  • OT--HBD Rubino.
  • Sign me up for Cityman phone. Hope ot comes to ATT. If it goes Verizon then I'm switching carriers
  • I'm with you on that. I'm contract free and plan on buying the phone outright. Who ever seems to have the proper support, I'll go with.
  • How does a carrier matter now? Microsoft said they will push out updates directly to phones bypassing the carriers. Only devices running 8.1 will be at the mercy of the carriers. And as the new flagships will come preinstalled with Windows 10, I don't see any need to worry about carrier support. Monthly plans or outright cost are the only things to think about.
  • I have had clients who asked the same question when they went from AT&T to Verizon.  They ALL regretted moving to Verizon.  The customer service, price plans and lack of updates just to name a few.  While in the meantime, AT&T has lowered their rates, give good customer service and have kept up with updates.  All of them are waiting for the MS flagship phones and all said they can hardly wait to return to AT&T.
  • I second this, those specs are enticing. I was hoping to grab the 1020 successor but I'm not sure I can pass up Cityman. Well with all the early upgrades carriers are providing now, I might not miss out ;).
  • I still wonder if the 1520 replacement will sport an Intel based processor. Continuum with full windows support would be awesome.
  • Why did you have to go say that now... See what you did, I started drooling all over again.... (This happens when I hear Intel based APU in 1520 like Phone and I say, let Contiuum reign.)  
  • Both need to go everywhere.  That's been one of their biggest problems, because alot of people won't switch carriers for their phone.  Whether or not people here will, is irrelevant.  If they truly want market share, make just a few great devices, and offer them on every carrier that will take them.   I personally hope they release a water resistant version of either of these phone, or make these particular ones waterproof.  Phones are big enough without having to slap an Otterbox on them.
  • Att will find way to mess it up.
  • AT&T seems to be one of the better carriers for WP.  They didn't have a good option for me when I got my phone (thus my S5 Active), but Verizon is definitely worse.  They demanded the Icon to themselves, thus no 930 anywhere in the US, then they dropped it like a bad habit in what? Less than a year?  I looked at one, and the rep tried to talk me into an iPhone, even after saying I hated Apple stuff.  AT&T reps didn't do that to me, at the least.
  • Microsoft Leaving Windows phone as they ll ship Windows 10 mobile from now on. Cortsey Rudy. Hah
  • Gud nite
  • Great article Daniel!
    Windows Phone future is much brighter. Two big reasons:
    1. Nokia was a liability. Now is gone.
    2. Complete lack of long term strategy. New leadership know-how.
  • Waiting for Surface Pro 4 with Hello on board... Yeah!
  • Count me in! Yeah!  
  • Its a google plot.  Every time Microsoft makes a major advance, we the same bucket of BS blogger-trolls giving us falling sky stories and tales of woe. Its amazing to me how they all drop on the same day at the same time using almost the same language.
  • More like the plot of morons. Pay little attention to the arm chair experts here (or anywhere). They tend not to really care about what they're saying. Give it 30 minutes and even this article will be populated with a few rebuttals claiming "they know better and Windows Phone is dead". It's like watching a news segment on the stock market...do it for the entertainment value, not the information.
  • I believe you're right - there seems to be an "organized" attempt (I'm pretty certain of it, it's all paid premiums somewhere, nice vacation here, freebies there) - business as usual these days - MS marketing and counter-marketing needs to improve as they lost that battle badly.
  • The only thing Microsoft needs to improve really
    is a nice portfolio of Windows 10 smartphones that are not 2 years behind the market.  That should be enough I guess.
  • Tech bloggers - especially of hitjob sites like the verge and techcrunch are some of the worst journalists on the earth- no ethics nothing.
    .
    .
    .it amazes me sometimes that even a dedicated website like windows central can do more levelheaded articles than sites such as verge and Engadget.
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    One day just like gamergate, these hit jobbers will be exposed. And I'm sure I'll be smiling that day.
  • Actually TechCrunch is losing their user base pretty well. You can tell by the comment sections. I just can't believe people still read TechCrunch after all the hate they get in their article comment sections.
  • I read an article this morning that Microsoft will move away from WP and start making Android devices. They did say it was a rumor, but just the thought made me sick. :/
  • why make WP on andoird devices? Just make apps for android? Still rooting for an amazing WP10 exerience though. Seems there are too many obvious improvements to be done and nothing is being done about it. 
  • That's because it's just one story and ALL these guys do is maybe change a word or two to pass off as their own work... they learned nothing in college. =/
  • Nice article. Really well written.
  • Yes a breath of fresh air, and a sigh of relief and anticipation on the pending flagships.
  • U r the master - Daniel Rubino
  • U're*
  • Nice
  • Nice article Daniel. IMHO Microsoft doesn't need OEMs for phones, take the Apple model and release 3 variant devices to cover flagship, mid-range and low end or some derivative of that.  It would streamline adoption and would allow updating devices with the latest firmware or os update at a much faster pace than it is today. Personally I wouldn't touch any phone release by the OEMs.  Microsoft (Nokia at the time) did a awesome job bring new features to their devices with each new firmware update.  Something you don't see with OEMs other than bug fixes.
  • Thanks. I see the point, but I believe Nadella does not want to be in the full-time hardware business. Instead, he'd rather MS make a few good "signature" devices and let their partners do the rest. It has worked for them in the past and even the Surface kick looks to have bolstered their partners.
  • So the "MS makes a few good "signature" devices" model would still fit.  Then just create a flagship device and let the OEMs pick up the slack for mid to low range devices.
  • Even as a consumer I don't like this idea. You've seen the Apple model. They make incremental changes in their hardware and yet they consistently sell for $700+. No competition stifles innovation and drives up prices.
  • I agree 100%. It's simple economics.
  • I agree Daniel.
    Plus, the "Apple" route has clearly stifled innovation. Competition and multiple manufacturers mean more choice and a better chance at getting the latest and greatest tech.
  • With so many hands in the cookie jar per say causes fragmentation IMHO.  Look at Andriod and all the OEMs creating phones.  It takes a very long time to update devices to the latest OS if at all.  The OEMs (and/or carriers) would rather you buy a new device than spend the time testing and rolling out updates. I am far from an Apple lover but for them to push an update that all their supporting devices can take advantage immediately is great.  Hell AT&T still hasn't rolled out Denim to all their devices.
  • You make a good point, but I believe it's been reported that with Windows 10, Microsoft has their finger on the update button. It may delay the update for a short period of time but ultimately carriers will be at the mercy of Microsoft.
  • Also, the fragmetation on Android is mostly caused because OEMs release a hell lot of devices every six months and most of those devices are Low-End $60 Bucks devices and why ever give support to those devices? Also, those devices are bad, and that's because on the High-End, many OEMs can't fight back Vs Samsung, HTC, Sony, LG, but on the Low-End they can have a "chance" Vs more Low-End devices from OEMs following the same strategy. On Windows Phone, both the Low-End up to the High-End are rocking the same and newer Windows Phone version, and that's because Microsoft is controlling the Extreme Low-End, and some other OEMs with same Hardware Configuration devices can have the same OS Version Microsoft have because they are trowing that OS Version on their Extreme Low-End so the OEMs can have it too. If you have fragmentation on the OS is because the OEMs are not interested in putting on some effort to make their devices work properly on the newer OS version because of drivers and stuff, not because they change the OS to the point the devices need a lot more hardware to run in properly (like on Android). What Microsoft need is to create momentum with Windows 10 Mobile, the public is going to get some interest (a lot more than today) and so the OEMs can launch more devices following more or less the Microsoft path of Hardware Configuration and just put it on some nice looking shells and they are good to go.
  • Excellent article! Thanks for being a voice of reason in a crazy world.   I would like to see the Surface strategy applied to Lumia. I think the "few good signature devices" should go beyond flagships and include low cost high-quality phone targeted at business distribution.  There seems to be a gap here, businesses want something highquality, long lasting, affordable, with a consistant experience year-after-year. Apple has been strong here but has a weakness because of cost and MS could get better integration with their IT infrasctructure. They can sell it through carriers or bulk purchases though IT supply shops like CDW. Seems like a Win win to me.   (Dude, 940 XL with Surface Pen (stylus) support, that's happening right?)
  • I think conflating the Surface (really a PC) with phones is a little off. Windows is much more vibrant in the PC market and there is a great deal more room for partners to find a niche. 3 percent of sub 10% does not give a lot of room to find a niche. As a result, I have a feeling that the Lumia name will live on in much the same way as Google uses their Nexus brand: MS picks from a rotation of partners and works closly to release a device that highlights the OS and the OEM. Nothing precludes a Lumia in each segment, potentially with different partners.
  • I firmy believe Microsoft can concentrate on producing models like the CityMan and Talkman yearly and enjoy a nice profit margin and as you suggested low the hardware partners address the mid-to-low end of the market. I look at Windows flagship phones like Apple does Macs. Highly profitable and helps showcae ow excellent the experience can be from 1st party manufacturer.
  • I don't think they should go for nice profit-margins if they want to capture even a little bit of marketshare... It needs to be a bit cheaper with extra features that are not on other platforms... If we had iOS, Android & WP flagship all at $700, then most would skip WP....
  • But Windows Phone flagships have been anything but highly profitable. If they were, it wouldn't be 2 years since the last time we saw one.
  • I wanted a Surface Pro but ended buying a Dell Venue Pro 11 instead... I still want the Surface but bought the Dell because it was cheaper and was close enough to the Surface... I'm just saying.
  • I have both and actually prefer the Venue Pro 11 because of the more standard 1080p screen. I hate the effects of Windows scaling on HiDPI screens (at least Apple got it mostly right with Retina), and so running the SP3 at native res really strains the eyeballs. Plus, the VP11 is about half the cost once you add needed accessories to both.   If you're into notetaking, the SP3 is superior, but for a small carry-around note, the VP11 is better.
  • What about ios n android app compilers
  • Daniel can you confirm one more thing for me? Please..... Are the phones made of metal or at least the side edges metal? Do they have Amoled screens? .
    .
    .
    .
    Please confirm :)
  • I've been trying to ask a question, plz reply, why dont microsoft or nokia release phones with 64G or higher storage????
  • Nearly 97 percent of all Windows Phone are Lumias, according to AdDuplex's latest advertising data. Those numbers are great for Nokia but are bad for Microsoft. How can Microsoft convince HTC or Samsung to make Windows Phones when they control so much of their market – why even bother?
      Superboy Micah, please read this a few times.  Read it until it sinks in.
  • This is one of the reasons why Microsoft should become a hardware company like Apple and make their own devices (Surface and Lumia) and stop giving Windows licenses to other companies.
  • This is one of the reasons why Microsoft should become a hardware company like Apple and make their own devices (Surface and Lumia)
    Microsoft is a software company to begin with. Their success in doing Xbox and Surface doesn't guarantee the same for Lumia hardware. Of course, Lumia did well. In fact, very well. But why should any OEM bother to make a WP when there's no place for them at all? How is it helping the consumers who DO NOT want to purchase a Windows phone because it's made by Microsoft and not their favourite OEM? Yes, there are people like such around me. I have a feeling that Lumia exclusives apps should be provided to others as well, by different names. Remember the current app launch Calls+ by microsoft? I can see what Microsoft is up for.
    ... and stop giving Windows licenses to other companies.
    Do you even care about the current Windows phone market share?  
  • Of course people would like to buy a Lumia if they decide to buy a Windows phone. Lumia has a name not only because it is from Nokia but also because it is now under Microsoft who also happen to be creating the software for it. Don't forget also the exclusive apps for Lumia. And this is currently what is happening - people are buying a Lumia for Windows phone. Except perhaps Apple, there is not one favorite OEM of anyone -- everyone likes to buy from the OEM whose product is superior in that sphere of the market. The same goes for Surface. It has superior hardware than most manufacturers and one of the reasons why Microsoft is selling it highly priced is that they don't want to compete with their OEM manufacturers. As for Windows Phone OS, it is entirely up to Microsoft to single-handedly increase its market share, since they make 97% of all WP phones. Microsoft should just get out of the software business slowly because it will hurt them in the long term. Devices is where the money is.
  • I call BS, I dont care about "exclusive apps" on Lumias, All my windows phones were Lumia because of their design. Lumia phones has the best design out there so why would I buy some BluHD or something which looks horrible when I compare it to other Lumias? I think this is the main reason people are buying more lumias, they are more physically appealing EDIT: They also got the typical Nokia quality photos from CarlZeiss.
  • I love the camera quality and build of Lumia phones, but I have always agreed that exclusive apps for Nokia phones were never a good thing. How can Microsoft expect others to love the OS if they have a phone from Samsung and its not allowed to download the newest camera app for example. That doesn't just give Samsung a bad name it gives the OS a bad name. I'm glad Microsoft is getting rid of this it seems. eg: Windows Camera, Calls+ as you mentioned
  • Microsoft's business model is just not set up that way. Let them go that and watch dell, hp, Toshiba, Acer, Asus, etc stay making chrome books. MS makes its bread and butter from software and services. Business licenses for Windows, Server, Office, users across Active Directory, etc are pretty expensive
  • Right, Windows 10 for PCs has no problem, but at least they should stop give licenses for Windows 10 Mobile and make their own devices with that OS.
     
  • Totally agreed. While the Lumia line offers really good hardware quality (as compared to local OEMs here), market share demands "hardware choices", something that we can learn from Android. Integrity in Diversity. I mean really, people do buy phones not just because of the OS they prefer, but sometimes the OEMs play a bigger role here.
  • Lumias have 97% market share because the other companies did not want to make any Windows Phones.  Samsung has just tipped their toe into the Windows Phone waters and quickly backed off. 
    I have an Samsung Ativ S and I made clear mistake to buy a Samsung device with WP, 
    they never gave a sneeze for this device.