Microsoft Corporation Loses Its Spot To Huawei In The Smartphone Race

Microsoft Corporation (NASDAQ:MSFT) continues to struggle in the smartphone industry, as it lost its third position, in terms of global mobile phone market share. Market research firm Strategy Analytics released a new report, which indicates that the Chinese smartphone vendor Huawei has replaced Microsoft with its improved smartphone performance this quarter.



During the second-quarter of fiscal 2015 (2QFY15), Microsoft sold 27.8 million phones, and Huawei sold 30.6 million; however, in 2QFY14, Microsoft shipped 50.3 million phones, and Huawei sold 20.6 million. These numbers dented the company’s image, as its sales lowered to nearly half this quarter, compared to a year ago.

As Huawei beat Microsoft in the recent reported figures, its market share rose from 4.8% in the previous year, to 7% at present. Meanwhile, Microsoft’s global mobile phone market share dipped from 11.8% to 6.4% this quarter. Xiaomi, Huawei’s Chinese rival, is right behind Microsoft, with a 4.6% market share.

There hasn’t been significant growth in the global mobile phone industry this year. For the same period in 2014, growth was 7%, whereas it’s 1.5% this year. This may be why Microsoft didn’t report impressive smartphone sales. While slow growth or a slight fall in sales, would be directly related to the industry’s performance, a 22.5-million unit fall in sales is quite astounding.

The software giant acquired Nokia Corporation’s (NYSE:NOK) handset unit in a $7.2 billion deal last year. While Microsoft’s FY14 sales grew, the company did not maintain or attempt to increase its industry dominance. FY14 sales were probably high, as the company acquired Nokia’s mobile phones; therefore, it inherited Nokia’s customers, and garnered the industry’s attention.

Microsoft still believes that it can regain its smartphone business, and emerge as a major player. Its 6.4% share is nearly an all-time low for the company, and is disappointing, especially as it owns the Nokia business as well. Perhaps, it believes that Windows 10’s public roll-out, later this year, will turn the game around. However, we doubt that.


While Windows 10 is a highly-anticipated offering, and may bring back some users that it lost in the recent OS versions, it is unlikely that it will attract smartphone users. Microsoft has made Windows 10 compatible with all of its devices, but this may not be enough. The company doesn’t have any solid game-plan left, nor does it have other unexplored markets. It should focus on its market-topping software offerings, and embrace the fact that it can't achieve much by selling hardware.