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Windows Phone Bumps Along the Bottom -- Good Sign?

Has Windows Phone hit the bottom of the trough? Figures released this week by market watchers at comScore could be a good sign for the Microsoft smartphone platform.

Windows Phone faced a challenge familiar to anyone who takes a moderately successful product and sends it back to the whiteboard for a do-over. I'm sure many a PowerPoint presentation projected on many a Microsoft corporate meeting room wall showed optimistic forecasts of Windows Phone being additive to Windows Mobile market share, with overall Microsoft share marching up and to the right in a confident and orderly fashion on the charts.

As often happens, the reality hasn't matched the budget forecasts. Rather than building on Windows Mobile market share, Windows Phone seemed to subtract from Microsoft's piece of the pie. The phenomenon was most strikingly illustrated in the August comparisons by Gartner of Q2 2010 to Q2 2011. Gartner's figures showed Windows Mobile's worldwide share in Q2 2010 was 5 percent, while Windows Phone 7's share in Q2 2011 was 1.6 percent. Looked at by another measure, Microsoft managed to sell about 1.3 million fewer Windows-based smartphones in the quarter, despite a rapidly expanding overall market.

Now come comScore's latest numbers for U.S. mobile subscribers, released this week. They're abysmal for Microsoft, but less alarmingly so than before. ComScore measured the three-month average for the period ending in August and compared it to the three-month average for the period ending in May. While Google rose by 5.6 points of share to 43.7 percent and Apple rose by 0.7 points to 27.3 percent, Microsoft fell by 0.1 points to 5.7 percent of the market.

One of the reasons that it may be OK for Microsoft is that Research In Motion shed 5.0 points of share to hit 19.7 percent -- so Microsoft is doing better than someone. Another is that Microsoft's rate of market share loss is moving in the right direction. Previous comScore reports had Microsoft dropping 1.7 points of share in June and 1.0 points in July, so the 0.1 point loss is downright stable. At the same time, RIM's market share losses have accelerated from 3.7 points in June to 4.0 points in July to the previously mentioned 5.0 points in August.

With the Windows Phone 7.5 updates hitting Microsoft's user base and coming out on new phones in September, the stable market share could be a bottom that Microsoft can build from. Then again, this could just be a plateau before a new drop. Only the numbers will tell.

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Posted by Scott Bekker on October 10, 2011 at 11:58 AM


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