Windows Phone Is Dead for Good: Five Scenes From Microsoft's 20 Years of Failing at Phones

Microsoft got into phones nine years before Apple did, and has now lost the phone market completely.

Windows Phone has failed, utterly.

On May 23, Microsoft announced another round of layoffs — 1,850 jobs in its smartphone business — and sold its feature-phone business to FIH Mobile. Microsoft has now cut more than 26,000 phone-related jobs. The original Windows Phone team and the staff who came over with Nokia are all but gone.

Terry Myerson, Microsoft's executive vice president for Windows and Devices, put it this way in an email to his division:

Our success in phones has been limited to those enterprise customers and individual consumers who care about security, manageability and collaboration. As such, our phone hardware business will be more focused. Terry Myerson

He said Microsoft would keep developing Windows 10 Mobile, but the email's meaning was plain: Microsoft has stopped caring about the consumer smartphone market.

Microsoft was one of the first companies in the world to touch smartphones. Windows CE, the ancestor of its phone operating system, was born in 1996. In 2000 came Pocket PC 2000, a touchscreen operating system built for mobile devices.

In 2002, the Orange SPV, the first smartphone running a Microsoft system, went on sale.

That same year, Apple was only just pulling out of its slump, and the iPod was a niche gadget few people bought; Google was four years old and not yet public. The iPhone and the first Android phones would not arrive until 2007 and 2008.

Today the world's smartphones are almost nothing but iOS and Android.

How did Microsoft botch all of this?

In the early 2000s, Nokia wrecked the plan to copy the PC

Windows CE arrived in 1996. The first version was a stripped-down build of Windows 95, and its interface kept a classic Microsoft fixture: the Start menu. The business model Microsoft imagined was the PC model — Microsoft would write the operating system, handset makers would build the hardware, and every phone running Windows would pay a license fee.

Bill Gates courted Nokia again and again, hoping the fast-growing phone giant would sign on. The two sides were even working on a joint project called Phoenix.

But Nokia had no wish to do Microsoft's drudge work the way PC makers did. In June 1998, Nokia joined Ericsson, Panasonic and Motorola — then among the largest handset makers — to invest in a software division spun out of the British PDA company Psion, and founded Symbian.

Gates felt betrayed. He wrote his now-famous email in anger: "We are very disappointed that Nokia never told us they were combining forces." "Whatever Symbian does, it will be bad for us."

Symbian 5.0 appeared in March 1999. It could make calls, get online, send email, and run third-party Java apps — far more useful than Windows CE.

Sony, Sanyo and Fujitsu later joined the Symbian alliance too.

Microsoft built no hardware of its own and depended on outside manufacturers, and now it had no one left to work with. It settled for HTC, an unknown Taiwanese company that had grown up as a contract manufacturer.

But a smartphone has to be a good phone first, with hardware people want. HTC was plainly not very good at that:

By 2003, Symbian held 66.6% of the global smartphone market. Microsoft had 22%.

Before the iPhone, Microsoft abandoned the right road

From Pocket PC 2000 onward, Microsoft's phone system did support touchscreens. But Microsoft designed its touch interface for a stylus, and you still had to poke at a Start menu in the top-left corner of the screen.

By today's standards we can fault Microsoft for clinging to PC thinking. Still, next to keyboard phones, touch was the road with a future. It only needed a great deal of work.

But when touchscreen phones stopped selling, Microsoft turned back toward keyboards.

In 2005, Microsoft announced a partnership with a former rival, Palm, which by then had split off its operating system, and released the Treo 700W running Windows Mobile 5. The Treo 700W had a full keyboard and a touchscreen, yet the interface barely changed. Windows Mobile looked shoved in by force.

In 2006, Microsoft worked with Motorola on the Q series of full-keyboard Windows Mobile phones. This time it went further: the Motorola Q9 dropped touch support altogether.

By then Apple's iPhone was already in development. At the 2007 Macworld conference, Steve Jobs held up the Motorola Q, the Palm Treo, the BlackBerry and the Nokia E92 for ridicule, to show how much more future there was in the way the iPhone worked.

Apple spent years solving the touchscreen problem. Microsoft turned around and built the same thing as the keyboard-bound rivals it had been beating.

The irony is that HTC, Microsoft's most important partner, already knew touch was the future.

In June 2007, the year the iPhone shipped, HTC released the HTC Touch. The phone ran Windows Mobile, but for the first time it carried an entirely new interface, one made for fingers.

Because Microsoft would not optimize for finger control itself, HTC built its own interface, TouchFLO. HTC later carried that habit of papering over an operating system's failings to Android, where it became Sense.

Anyone who knows HTC knows one of its famous phones, the HTC HD2. Its HTC Sense interface was beautiful, it used a multi-touch capacitive screen, and it needed no stylus. You could hardly tell the HD2 ran Windows.

The pity is that it was born in 2009. The iPhone had solved the finger problem in 2007, and solved it better.

Against Android, Microsoft reacted several beats too late

The iPhone's launch jolted every phone maker, Microsoft included.

Google moved fast. One account describes how Andy Rubin, then in charge of Android, took the news. On the morning of the announcement, Rubin was on the road 600 miles from Las Vegas, heading to CES to meet carriers.

He saw the iPhone in Steve Jobs's hand on television and was astonished. He had the driver pull over so he could watch the rest of the keynote online. On the future of the Android he was still brewing, his verdict was: "I guess we're not going to ship that phone."

We later learned that Android at the time had a full keyboard; the prototype looked a lot like a BlackBerry. A year later, Android 1.0 arrived with its interface torn down and rebuilt.

Google's Android tore everything down and pivoted in a hurry. Microsoft, after the iPhone, was simply lost.

The iPhone launched in January 2007. In February, Microsoft released Windows Mobile 6.0. In April 2008 came Windows Mobile 6.1, a patch job. As late as mid-2009, Microsoft was still pushing out the Windows Mobile 6.5 update — next to the iPhone, still a patch job.

Also in 2007, Google joined HTC, Broadcom, LG, Samsung and others to found the Open Handset Alliance. In 2008 came the HTC G1, the first consumer Android phone. By 2009, Android had iterated quickly to version 1.5, adding a virtual keyboard, a gravity sensor and support for several languages, Chinese among them.

By then the iPhone 3GS had launched and the App Store had been open for nearly a year. Facing a dominant iPhone, more and more carriers and handset makers chose the friendly, open-source Android.

Another irony: Andy Rubin, who pushed Android through internal resistance at Google, once worked briefly for Microsoft. His earlier phone startup, Danger, was bought by Microsoft; soon after the deal he left to found Android, and then brought Android with him to Google.

In 2010, Microsoft released Windows Phone 7, rebuilt for fingers. But that same year Verizon, the biggest carrier in the United States, teamed up with Motorola on the Droid, the first Android phone to sell more than a million units. Soon after, Samsung released the Galaxy S and began what is today the most successful line of high-end Android phones.

Microsoft was too slow.

Windows Phone 7 shipped, but Microsoft picked the wrong rival

Windows Phone 7, released in October 2010, mattered. Its interface had a style of its own, unlike Android, which only copied the iPhone. Its design language ran ahead of its time, and other products went on to copy it.

To be fair, the flaws critics pounded on at launch — no copy and paste, for one — were not that grave. The first iPhone shipped without copy and paste or multitasking either.

But the iPhone could afford those gaps in 2007. Windows Phone 7, three years late, could not, because it came second.

Choosing to fight the iPhone head-on hurt Microsoft with consumers, and it also failed to win over manufacturers.

Outside manufacturers paid no license fee to use Android. Microsoft charged tens of dollars for every Windows Phone.

Manufacturers were also barred from altering the Windows Phone interface — Microsoft had made a single unified design its main weapon against the iPhone.

The result: every Windows Phone 7 handset looked the same, whatever the brand on the front. No phone maker will bet its main line on a platform that leaves it nothing to stand out with.

By October 2010, Android's market share had reached 30%. By choosing to fight the iPhone, Microsoft gave up its chance to take Android's customers.

Windows Phone 8: infighting at the worst moment

In 2011, Microsoft finally landed a heavyweight partner willing to go all in — Nokia, the company that had wrecked Microsoft's phone market years before.

Before it turned to Microsoft, Nokia had talked with Google about joining the Android camp, but Google would not give Nokia special terms.

Nokia probably did not grasp that working with Microsoft would not help it at all, and would in fact slow it down.

The partnership began in 2011, and updates to Microsoft's Windows Phone system stopped dead. Windows Phone 8 did not appear until the summer of 2012.

Microsoft proudly called Windows Phone 8 a fresh start: it dropped the Windows CE kernel for Windows NT, the same kernel as Windows 8, so that Windows apps would eventually run everywhere and phones and PCs would work together seamlessly.

Why, at the very moment the product was finding its feet, did Microsoft tear it down again and put the kernel at the center?

Microsoft was organized by product line, and each division ran its own marketing and sales and reported its own revenue. In that structure, the divisions that made more money naturally had more say.

Mobile belonged to the Windows Phone team. But once mobile became the trend, the Windows division wanted in.

Microsoft's priority for phones shifted. Instead of polishing the product fast enough to catch Android and the iPhone, the goal became fitting in with the PC business — one unified Windows 8 covering phones and PCs alike.

In the two years Nokia spent waiting for Windows Phone 8, iPhone sales tripled and Android's grew more than sixfold.

When the iPhone first appeared, Nokia, BlackBerry and Microsoft all mocked it in public.

In private, the managements of Nokia and BlackBerry were already moving. Nokia raised the priority of Maemo, its touchscreen Linux system, and BlackBerry struck back in 2008 with the touchscreen Storm.

In the end neither of these handset makers, neither much good at platforms or software, caught Apple and Google.

Microsoft had far stronger software engineering and far more platform experience — Windows had been the biggest platform of all — and yet it moved its Windows phones along at a stroll, and even stopped work on the mobile system to wait for Windows 8.

Nokia's most ironic product may be the camera phone it released in 2012, the PureView 808, with a huge 41-megapixel sensor.

A year after announcing it was dropping Symbian for Windows, Nokia built that phone on Symbian. The reason? Windows Phone 8 had not arrived, and it did not support the processor the camera module needed.

A run of failures cost Microsoft a $600 billion opportunity

After 2012, you could say the mobile market had nothing real to do with Microsoft anymore — even though it spent more than $9 billion buying Nokia.

That money is now entirely wasted. The 20,000-plus employees who came to Microsoft with Nokia have all been cut. Microsoft has dropped the Nokia brand, and sold the feature-phone business to FIH Mobile.

Beyond that squandered $7.2 billion, Microsoft also lost its chance to rule the smartphone market.

From the iPhone's launch in 2007 until now, Apple has taken in $597.7 billion selling iPhones alone — and that leaves out the App Store, tablets, watches and everything else the iPhone pulled along with it.

Every quarter, iPhones and Android phones each outsell all Windows phones and PCs combined, by a wide margin. Apple's and Google's market values are also far above Microsoft's:

Office, server software and cloud computing still make Microsoft a great deal of money. But like IBM before it, Microsoft has been cut off, bit by bit, from consumers. All of it goes back to losing mobile.