Windows Phone Turned the Corner in 2013

Windows Phone Turned the Corner in 2013

We're number three. And no, that doesn't suck

2013 was nothing less than a blockbuster success for Windows Phone, which went from industry also-ran to the undisputed third mobile ecosystem, and is poised to challenge iPhone for the number two spot. You didn't think it could get this good? That's OK, neither did I.

Here are some of the factors that contributed to this stunning turnaround.

Market share improvements

Windows Phone ended 2012 with worldwide market share of 2.8 percent, using figures averages between IDC and Gartner. At that time a year ago, Windows Phone trailed even Blackberry and was in fourth place in the platform/ecosystem battle. If there was a silver lining to 2012's finish, it was that Windows Phone growth—about 150 percent, year over year—dramatically outpaced the rest of the industry. And Blackberry, of course, was on the way down.

By the end of this year, things are looking better, and much better in many countries. Worldwide, Windows Phone commanded 3.6 percent worldwide market share. Still a pittance, you say, and fair enough. But continued year over year growth of over 150 percent helped Windows Phone catapult ahead of Blackberry for good. Indeed, Windows Phone market share is over double that of Blackberry.

2013 was, alas, the year that Android became the Windows of the mobile world. Android surpassed 80 percent market share in Q3, which was a big story. But an equally big story, perhaps, was Apple's fall. While Apple sold more devices overall in 2013 than before, its growth was by far the slowest of the three biggest platforms. And where iPhone commanded a bit under 21 percent market share in 2012, it was down to 12.5 percent in Q3 2013. The distance between Windows Phone and iPhone has been cut dramatically.

Now, Apple will see a temporary one-quarter bump in Q4 because of the iPhone 5S, as is the case each time it launches a new iPhone, and Apple of course performs overly-strongly in just the United States, its richest and home market. But the overall trends are clear: iPhone is sinking as Windows Phone is growing. And if these trends continue, Windows Phone has a chance of catching up to the iPhone in the coming years. This was a fantastical possibility just a year or two ago.

More exciting for Windows Phone fans is how well the platform is performing against the iPhone in certain key markets. Indeed, depending on where you look, Windows Phone is already beating iPhone.

According to Kantar Worldpanel, Windows Phone in Q3 commanded 8.2 percent market share in the five biggest European markets—UK, Germany, France, Italy and Spain—exceeding 10 percent in some of them. It took 11.6 percent share in Mexico. Earlier in the year, IDC confirmed a Microsoft report that Windows Phone was outselling iPhone in Argentina, India, Poland, Russia, South Africa and the Ukraine. And mid-year, Microsoft COO Kevin Turner expanded that list: The platform was outselling iPhone in 10 "big" countries. And by Q3 2013, Windows Phone was outselling iPhone in all of Latin America.

I'll discuss the reasons for this success below, and remind everyone that there are always caveats around the seasonality of Apple's new device sales and so on. But again, the overall trend is positive for Microsoft and negative for Apple.

More and more apps

This month, the Windows Phone Store surpassed 200,000 apps, up from 130,000 apps in late February. So the app store is growing at a rate of about 8,000 apps per month.

So how does this compare with the biggest mobile app markets?

The number one player is Google Play Store, which serves Android: Google hit 1 million apps in July, which I believe was the last official update. Given the firm's previous app total announcement (850,000 apps in April 2013), Android was gaining apps at a rate of 50,000 per month.

In October, Apple announced there were more than 1 million apps in the iOS App Store, which is split between iPhone apps and iPad-specific apps. That's up from 900,000 apps in June, so they were able to add 100,000 apps in four months, or 25,000 per month.

So while the Windows Phone Store is obviously smaller—much smaller—than Google Play Store or Apple's App Store, the growth is strong, about even with Android and ahead of iOS.

But at some point we need to have a more relevant conversation around apps. First, sheer size doesn't matter if no one is using most of those apps. And what's important than volume is quality: As long as the "right" apps are available, a market with 100,000 or 200,000 apps isn't just OK, it's spectacular.

Haters will always be able to point to apps that are not available on Windows Phone; it's a moving target. But 2013 was an amazing year for important new apps, and the so-called "app gap" shrunk dramatically during the year. I expect it to effectively close for all but the most esoteric apps in 2014.

So what did we see hit the platform in 2013? How about this partial list, from just the last six months of the year: 7-Eleven, ABC News, Adobe Reader, Amtrak, Animal Planet, At Bat 13, Best Buy, CBS Sports, Discover Channel, Domino's, Facebook (major update), Hipstamatic Oggl, iHeartRadio, Instagram, LivingSocial, MapQuest, Mint, NASCAR Mobile 13, Redbox, TLC, Viber, Vine, Voxer, Walgreens, Waze, Wells Fargo. Want games? Here's another partial list from the past 6 months: Angry Birds Go!, Angry Birds: Star Wars II, Asphalt 7, Asphalt 8: Airborne, Despicable Me: Minion Rush, Jetpack Joyride, Monsters University, N.O.V.A. 3, Order and Chaos, Star Wars: Tiny Death Star, Temple Run Brave, Temple Run Oz, Turbo, UNO & Friends, Where's My Mickey, Where's My Water 2

And those lists don't even touch on the amazing Windows Phone-specific apps that we also enjoy, from Bing News, Weather and Finance to Fresh Paint to the amazing Nokia HERE apps, and many, many Xbox Live games like Halo: Spartan Assault. Nor does it include the many games Gameloft and Amiga have announced. We don't just have apps. We have killer apps.

Device proliferation

With Nokia commanding over 80 percent usage share (and probably even higher market share by this point), it's fair to say that this one firm has an outsized responsibility for the health of the overall ecosystem. (Not coincidentally, this is why Microsoft is purchasing the firm's hardware and services businesses.) I wrote a series of "Nokia Advantage" articles in early 2013 that focused on key aspects of this firm's success, like Customizable Design, Accessories, Apps, and Camera. But as the year progressed, Nokia's ability to hit different market segments with just the right devices became, perhaps, its key advantage.

I will be writing separate articles about specific Nokia devices soon, but 2013 was a watershed year for the firm's hardware designs.

This year alone, it introduced several stunning new designs at the low-end of the market—the Lumia 520, 521 and 525. The devices are almost singlehandedly responsible for Windows Phone's market share gains in 2013 thanks to a perfect mix of affordable pricing (the 520 is just $60, contract-free, right now in the US) and high-end feature set. Check out In Praise of the Nokia Lumia 520 for a quick overview of this amazing little device.

At the high-end, Nokia continually improved on its initial Windows Phone 8 flagship, the Lumia 920, with a series of designs—the Lumia 928 and 925, for example—that improved on the original. But then it shipped the category-busting Lumia 1020, in contention for the single best tech product of 2013, with its amazing 41 megapixel camera. This is still my smart phone of choice, and the single best smart phone I've ever used.

Nokia also burst into phablets with the Lumia 1520 and 1320, and into tablets with the Windows RT-based Lumia 2520. Again, this is a company that has a device for every possible market, budget, and use case. They should be respected and loved for pushing this platform, arguably, even harder than Microsoft has.

Finally, software updates

But let's not forget Microsoft, shall we? The firm delivered Windows Phone 8 in late 2012 and the inexplicably moved to an 18-month development cycle at a time at which the rest of Microsoft was moving to a rapid release cycle, with major products like Windows seeing annual updates. So while Windows 8.1 shipped in October 2013, Windows Phone 8.1 isn't expected until April 2014.

But the Windows Phone team didn't sit out 2013. After enduring years of criticism for its inability to deliver software updates to users—despite the fact that the situation on Android, a much bigger platform, is in fact much worse—something wonderful happened in this year. They started delivering updates. And two of them were quite major releases.

You can find out more about the first of these two updates, called GDR2 (and retroactively renamed to Update 2) in my Complete Guide to Windows Phone 8 GDR2. This update rolled out over the summer and added a host of new features to Windows Phone 8.

And in a completely unexpected move, Microsoft figured out how to bypass the carriers and deliver the next major update, called Update 3, to anyone that wanted it early. You can check out Windows Phone 8 Update 3 Preview for an overview, or any of the several Update 3 feature articles I've written, including Update Your Handset Today!, App Shutdown, Ringtone Improvements, Driving Mode, Phone Storage Management, and Screen Rotation Lock.

Or read Windows Phone 8: By Slowing Down, Microsoft Picked Up the Pace for another overview of Microsoft's amazing year of Windows Phone 8 updates. (Those with Nokia handsets also benefitted from some big Nokia software updates this year as well.)

Annus mirabilis?

While I still think that Windows Phone needs double digit market share globally before we can truly declare success, this year has regardless been amazing. Between faltering competition (Blackberry, iPhone), market share gains, many major new device releases, and explosion of new apps and games, and the truly unexpected ability of Microsoft to finally figure out a way to get meaningful software updates out to users, 2013 has been nothing short of miraculous. And if the rumors we're hearing about Microsoft planning to merge Windows RT and Windows Phone in 2014 pan out, next year could be even more interesting.

Drink a toast, Windows Phone fans. We finally have something substantial to celebrate.

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