Microsoft's Windows Phone revenue tanks 49 percent for Q2 FY2016

While Microsoft's FY2016 Q2 earnings have been exceptionally high and beating most expectations, their phone division was hit hard. None of that should be surprising for reasons we covered yesterday, but at least, we have an idea of just how bad things are for mobile.

Microsoft reported a 49 percent drop in devices revenue from the last quarter. That brings the number to an estimated 4.5 million Lumias sold for the quarter down from the 10.5 million Lumias from one year ago.

Windows Phone sales in the US plummet to all-time low

While the Lumia 950, Lumia 950 XL and Lumia 550 hit some store shelves this holiday season, there is little argument that most consumers are unaware of the product.

How Microsoft stops their nosediving smartphone story in 2016 remains to be seen. At this time, there does not seem like there is much that can turn this division around. Whatever mobile products are in the pipeline better blow the doors off of anything we have seen thus far.

Daniel Rubino

Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been here covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, Microsoft Surface, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics and ran the projectors at movie theaters, which has done absolutely nothing for his career.

  • Oh man
  • **** man
  • "Mobile First, Cloud First"  One win, one FAIL!  Nadella scores 50%.
  • I recently sent this on another post. But it bears repeating. "Mobile first" does not mean "mobile phones" first. That's not the strategy. In fact, Nadella made this very clear. Mobile means making Microsoft (its software) "mobile." Hence, why now Microsoft has gotten on IOS and Android with such urgency. The plan is working and MS is now relevant again. The plan never included mobile phones really or at least didn't emphasize it. That's the part the sucks for us.
  • This Microsoft is/was irrelevant argument is always questionable.  With the install base of the various versions of Windows in the world, the argument that Microsoft is in any way irrelevant requires proof that​ I've not seen before.  And no, a year over year drop, or even multiple year over year drops in the number of PC's sold in a mature, if not largely saturated market, does not constitute proof.  That picture would simply show a plateau in a mature market (PC's being a consumer item for decades now) and the encroachment of a relatively new market segment (tablets).  And also no, comparing the install base of mobiles to PC still does not show MS irrelevance.
  • "Mobile means making Microsoft (its software) "mobile." Hence, why now Microsoft has gotten on IOS and Android with such urgency. The plan is working and MS is now relevant again." Very intelligently explained, except it's wrong.  Even with your definition, Nadella is failing.  People aren't using Cortana when they can use Siri, or Google Now.  People are using apps associatd with the platform (Google/Apple).  Apple Maps is routinely panned, but it is the number 10 mobile app, because it's easier to use the native/platform app. If Nadella's thought was that Microsoft could lose the mobile platform war, but still win the mobile app war, well; that was FAIL.  Now, they aren't relevant in hardware or software.  He's human, and he made a mistake.        
  • Want more proof Nadella has failed in mobile, and placed Microsoft in trouble long-term?  Even the UWA is now dying with the death of Windows mobile.  Why build a Universal App when no one uses anything buy the desktop/browser?  "users can see that Microsoft is focusing on other platforms, then developers can see it too and they aren’t pleased. Tencent pointed out that “users on the Windows Phone platform keeps declining and have moved to other platforms, but [we] didn’t notice that Microsoft is showing any effort to retain them”.        
  • @infosage agree,nadella should be reassigned to the azure sector and the ceo place held by panay
    Nadella as ceo is only collecting failures
    Capossela and Belfiore resigned asap
  • Yeah right, BING,XBOX,OFFICE, CLOUD(like in cloud computing) platform,Surface all profits have been raised but you, in your delusions, really seems to believe that Microsoft = Windows phone.
    Wake-up and start to watch Microsoft and his different platforms.
    Btw, phones is not the market of the future it's became like computer,it's done the war is over.
    The future is in a Cloud and Microsoft just made more than 6 billions inn revenue ,and AR/VR
  • UWP is well and alive and doesn't depend on no-sayers like you. Devs get at least 3x more money than before UWP (I can tell) and it is growing. No it isn't as attractive as App Store, but it is going in the right direction. Considering phones, this isn't a bad news for devs. Most Lumia owners were Lumia 520 or 630 owners, and they would never buy an app in this world. So if Microsoft finally gave up of chasing them there's nothing wrong with that at least from the perspective of most devs (yes there are different apps and from perspective of some apps even those users are important, but for most app development it ain't like that).
  • Ok, so where is my Bank of America, GEICO, Aetna, Lyft, etc., etc., etc., apps???
  • UWP is going strongly forward by any measure, apps are coming, devs are earning more. I am not a fan of the same companies as you, so I can't answer about their apps, you can contact them.
  • Just to note that I was more referring to UWP as a platform. It seems that you more refer to mobile specifically. UWP is growing because of PC, it ain't a secret. Windows 10 Mobile isn't even officially alive yet. Platform mostly depends on the developers that make money on it. Clearly there are some companies that earn money from selling even to people that have Lumias 520 (as finally those people have something to eat and to buy it from someone) and they have free mobile apps to support their businesses and they might not be happy with Microsoft's shrinking sales. Again, I have answered about UWP and its future. It has a bright future. It will surely help Windows 10 Mobile to grow (and not the opposite). What happens to the mobile is another question. It seems that Microsoft is giving up of chasing Android and want to chase iPhone. Which is a smart strategy if it succeeds.
  • and there is the issue that MS seems to ignore...apps, apps, apps.  Even their own apps are better on the other platforms.  Also, the OS is not final and still in Beta, horrible roll out.
  • The 'U' in UWP stands for Universal, which is pointless if it only applies to Windows 10 desktops. So yea, with the death of Windows mobile the whole point of 'Universal' apps dies. Nadella really messed up the "Mobile First" part of his strategy. And, just because the Cloud First part is working, doesn't mean he didn't fail on mobile half. It wasnt great before, but two years into his leadership Microsoft Mobile is in much worse condition than when he took over. It's obvious he has failed big on half his strategy.
  • Platform is a platform, it succeeds if it sells, not by the number of devices that it supports. UWP sells you may like it or not. I can't judge how Windows 10 Mobile is going to be successful, it is ridicilous to comment on something that isn't even out there, only haters can do that. I am just saying that already successful UWP platform will make Windows 10 Mobile life easier, that's all. I don't see how anyone can say a word against those obvious facts.
  • Mobile First actually means your DATA is whatever device or OS you can access your data. Considering Microsoft software is ubiquitous then that's a WIN!
  • Is Microsoft offering a trade in program towards a new iPhone? Seems to be their next move.
  • I think their explanation was incomplete. Mobile also includes tablets, 2-in-1s, and convertibles, which are exploding right now.
  • Lol you don't know what your talking about. Did you forget about $7+ Billion buying Nokia to try keep Windows Phone hardware going? Satya's latest "vision" is nothing but a Back-up plan called Plan Z, Microsoft's Mobile offering now is nothing but a 3rd party app provider to the mighty Apple/Google who hands them peanuts (30% in app purchases). Pennies (under $100M in 2015) compared to the $30+ Billion revenue Google alone have earned from Android so far. Don't believe the PR bull about "Mobile First", sure its not all his fault that Lumia has failed, but he has truly giving up on Windows succeeding on Mobile which is a loser mentality.
  • @ wplee LOL at Google earnings from Android.
  • I'm pretty sure the naming convention of Windows 10 Mobile is significant and relevent. 
  • Satya should resign.
  • Mr. 'Stocks price increase after announcement' seems to disagree
  • Why, because Microsoft = Windows phone?Since when? and why Microsoft stocks have risen if it's so.
    Seriously you guys really are idiotic
  • mobile first =/ mobile phones first  
  • mobile first, cloud first are already happening.  It simply mean, that you can use any mobile devices e.g iphone, android, etc to work on... uhm... say office, and continue working where you left off on a PC at home.  These are made possible by the cloud.
  • It is mobile first. He has most of the important services on Android and iOS.
  • Might as well say "50%",,,,,, man.......
  • Unless they pull a miracle device out of their hat later this year, Windows Phone is over.
  • You forgot the man,,, man.
  • Windows Phone died last year. Windows 10 Mobile is made for small, portable computing devices. There might be phones with it loaded as well, but the focus is already on small devices in general, not on phones specifically. Why we call our small devices "phones" is a relic from the past.
  • Very well put!
  • Yeah, really. By Jove I think he gets it.
  • Buyers of Apple's 70 million iPhones last quarter would disagree that they bought a "device."  They would say they bought a phone.  Now do you get it?  Heh heh.
  • You're absolutely right. Microsoft can't compete in that market. While they'll still make "Phones", they're not the vision of a Microsoft Mobile Device.
    The majority of smartphone buyers buy a phone, that also does other neat things. But they buy it because it's a phone. Microsoft sees a mobile device as an extension of Windows 10.... that also works as a phone. It's a whole new market. Are they right? Time will tell.
  • Microsoft is on the right track, unfortunately they are a bit ahead of the mentality of the general population, as are many of the emerging technology we are seeing today like wearables.  By the time this does go mainstream, Microsoft will have been pushed out of the market, and more dominant players like Apple will swoop in to implement it for themselves and claim it as their own invention.  I hope it doesn't play out that way though. 
  • There not ahead of anything, you can keep believing & telling yourself that garbage to make you feel better all you want. Microsoft are idiots when it comes to this phone game. They don't listen to anyone. Only thing they had to do was bring in the APPS! then alot of people would have loved to buy windows phones. Every site you go on the people that review the windows phones always say the same thing there's NO APPS! Everyone knows this, but for some reason Microsoft & all of there minion fanboys don't get it. Well I hope Microsoft is happy now, because now they have a noose around there necks and there trying to find a way to get it off. Good luck
  • When will people realize it is the devs abandoning the WP platform? For ****'s sake, wake the **** up.
  • I assume they are also referring to the unified OS, hololens, etc. Apple's plan for the past few years has not been innovation, but implementation of existing ideas.
  • Apple have 17% smartphone market share worldwide......that means 83% of smartphone buyers don't choose, iPhone sales are decreasing as are iPad sales.....
  • What do you mean decreasing, Apple just had a record quarter of iPhone sales, with iPhone sale grew about 2-3% YOY last quarter, witch is growth, the excate oppisite of decline no matter how small it is. If you mean iPhone sales are projected to decrease next quarter, well that is true, but as of right now, iPhone sales are still growing. Also last quarter Apple iPhone accounded for 19% of worldwide marketshare. 
  • Last quarter is not this quarter so.....  Analysts currently expect Microsoft to report 7.8% higher earnings and 4% higher revenue in 2016. That's much higher than the 1.9% decline in profit and 2.2% drop in revenue in 2016 expected for Apple. Apple warned investors that iPhone shipments would fall for the first time in the first quarter. Apple's most recent quarterly revenue growth of 1.7% was a fraction of its 18% growth in the past 12 months and well below is 22% growth in the third quarter, which underscores the rising concern and feeling the smartphone market has peaked. Even Apple states that iPhone sales are falling in THIS quarter.    
  • As are Samsung's forecasts for next year. How many other Smartphone OEM's are in trouble? Sony? HTC? How many new ones are entering the Android Market?.....that's at the saturation point already.
    So what's the "Next Thing" for mobile?
  • @beyondinfinity You are right, this has happened to Microsoft before. Somewhere in the mid 90's I had a Philips Niño with Windows CE running Schedule+ and in 2004 I bought my first 'Windows Phone' from T-Mobile. There were Windows tablets around more than 10 years ago. Like Philips with its Video 2000 system, way better than the Japanese stuf, but they already had the market. Microsoft was ahead with the Windows 8.x user experience as well, but it was too much of a discontinuity from the traditional desktop. With Windows 10 one can more or less configure it as one likes it. This will help move to touch devices. One of the things is that those tech department dinosaurs in enterprises and higher management do not easily understand the productivity gain that touch can bring and enterprise software developers being weary to rewrite their UI's.  
  • .... Their phones Posted via the Windows Central App for Android on my Lumia 950 XL
  • Non-sense. A phone is a phone, and Windows Phone has failed through the neglect and incompetence of Satya Nadella.
  • Not just Nadella. They screwed it up repeatedly under balmer. 
  • ballmer destroyed windows phone before it got over 5% market share.  His Stupid anti google bashing. not one single google app for windows phone. not even youtube. ballmers fault.  He did nothing to get developers on board for apps. If anything, MS drove away developers.  No apps. No marketshare. No sales. WP is done. Surface phone will change Nothing
  • uh huh, sure blame Nadella for a failure to launch that took more years that he's been CEO.   So no, not Nadella.
    ​ We'll see what happens.   I have my 950 and am supporting the platform. 
  • I will give it to you die hard Windows fans. You are loyal as hell and you will Wait until the end of time on something, anything ... to happen... and then, you wait some more....
  • Former diehard here, but I woke up. You can only tolerate so much from MS. I think what did it for me was when Sataya fired all the former Nokia team, renamed wp to w10m, and rebooted wp the third time to suit Android and iOS users, replacing everything I loved about wp. It's a good thing I woke up because i would've never known what I missed out by not jumping to the iPhone.
  • No,  its not solely on Sat's shoulders.  Its a collective mess up of everyone involved.  Windows phone needs a fresh kick in the pants.  It needs a new lead that wants it to survive,  it needs for MS to want it to survive as well.  It still can be a very profitable division if they jump on it NOW.  They need a couple of high profile people to start promoting it, they need a massive marketing campain,  they need to get it on EVERY carrier (screw exclusitivy deals,  they are a sham for everyone involved including the carrier),  They need some great devices (we already have those now,  but need the niche devices that no one else has like a Surface phone, and a 1020 replacement).  Stuff to get the buyers interested again. 
  • It is on his shoulders. He's the strategy maker. He determines everything about WM!
  • Oh really? When was this profound strategy revealed?
  • This. Phones will still be a part of it. Windows Phone is old news. Windows 10 Mobile is where it is and to be truthful, a lot has hurt the phone business, not just the perception that people do not want this phone. Windows 10 Mobile was not ready, or likely the final Lumia phones would have been releasedd earlier, making some impact. MS has changed their relationship with carriers and currently, there is but a single phone available subsidized from the current crop. While I do see Daniel's point that MacLaren being dropped had an impact, it was mostly from the point of having to start over on design and re-think features. I would be nice to know the how and why of that, but enthusiasts chasing after vapor-hardware (even those saying they must wait for Surface Phone) has a detrimental effect on the penetration of perfectly capable phones presently being offered. With each update I get on my 950, its performance improves exponentially. Battery, screen, speed have all been improved since the latests builds and the last firmware update. Were mobile really ready when it should have been - September, we might have seen a far better picture.
  • Windows 10 Mobile IS S.H.I.T and you just bought a friggin' non premium looking $750 phone WITH A HALF BAKED NOT EVEN BETA OS! As one single piece of evidence to show how unbaked this OS is, go to messages, a single thread, then come back out. There isn't even an animation there! iOS has been maturing for years now, and now the "latest" OS doesn't even have an animation! The dialer app has difficulty following key presses! Talk about asynchronous programming Microsoft THEMSELVES KEEP PROFESSING ON MODERN APPS! The dialer looks like a half a$$ed copy of Samsung's launcher! And you paid dearly for this monstrosity! Quit being such a blind fanboy and let Microsoft starve in the phone business so they know the price of betraying the fans by trashing Metro/ Modern design and ignoring our cries for mistake after mistake! It's people like YOU who don't let them hear us! How you manage to put a positive spin on this level of stupidity is beyond me!
  • Wholeheartedly agree! Same thinking as I and wish could give a million thumbs up!
  • The guy paid the amount of money for the most complete, most premium device you can think of, and is boasing that his phone's battery life is marginally better compared to the CR@P it was released with!
    Imagine if Apple pulled that off. Imagine if Siri was kept as "Beta" for this long, or the native apps were so buggy... Even the hardware choices are so poor: they cut from the premium, metal look and feel of a flagship phone, and implemented a gimmicky Windows Hello THAT YOU CAN'T EVEN ACTIVATE WITH YOUR PHONE ON THE TABLE. You just HAVE TO pick it up and look at. The fingerprint thing is both easy to use and practical. It's just a mess of a management over at Microsoft Mobile. If it were up to me I would have probably fired half of the managers over there.
  • I like it.
  • I don't see how devices are going to make that much of a difference tbh. People can argue all they want that a metal design would have been better for the 950 and XL (I have a 950 and like the design of the phone) but other than cosmetics what are people expecting the miracle devices to do that will persuade people to leave their current platform? I don't know any iPhone users who could be bothered to switch to a different platform - they like getting their annual / bi-annual upgrade to latest model. They need more than just a device if they want to bring in more users, unless it will perform sexual favours for you and do all the housework... I'm still using a Windows phone because it's genuinely my favourite platform - I don't know why so many Windows Central users stick with it if they have problems with it. Everybody has different needs from their phone, so just buy the phone that does everything you need, and has the apps you need. If you (people in general, not you specifically) can't think of a number of reasons why you still want to use Windows on your phone then why do it - You could move on and be happy.
  • First platform to get the vaunted pico-projector wins
  • Pico-Projector for Continuum on the go....That would be great.
  • There has already been Android phones with little projectors built in. They flopped.
  • So true man. I've been using the platform since wp7 and have no intentions on leaving until they cease making devices. If I was unhappy, I would have moved on already.
  • See, no apps for housework or favors. Do they have them on iPhone?
  • Exactly...which is why "mobile" in "mobile first, cloud first" doesn't mean mobile phones first. Nadella knows this.
  • At this point, I doubt much of anything could persuade people to jump to WP. You said it yourself, Apple provides consistent yearly upgrades, making things easier to plan for customers ("it just works" == "you don't need to needlessly think" applies here). This is one of the areas where MS/Nokia dropped the ball.
  • There will be no miracle dev