Why Lumia Smartphones Will Make or Break Microsoft’s Mobile Strategy

By Don Reisinger

After Microsoft announced 18,000 layoffs, the company also noted that it will no longer be offering Nokia X devices. Those products, which were running Android, will now be given the Lumia branding and will run on Windows Phone. The idea behind Nokia X was to attract customers in emerging markets. Microsoft now wants to do that with Lumia and Windows Phone.

It’s important to keep in mind just how important emerging markets are to Microsoft. In his letter to his employees, Stephen Elop said that emerging markets will be a central component in the growth of Windows Phone over the next several years, and it’s incumbent upon the company to realize that and capitalize on it. Look for places like India, Malaysia and South America to be important to Microsoft and Lumia.

One thing that both Nadella and Elop made clear recently is that trying to be Apple is not in their plan. While they might like to have a product that is as popular as the iPhone, they’re not tied to that as a business strategy. Instead, Microsoft wants to expand the reach of its mobile platforms.

Speaking of platforms, Microsoft wants to incorporate several into its product line. While Windows Phone is the overarching platform it cares about, the company also wants to use Lumia devices as mobile vehicles for its cloud services, like Office 365 and others. Platform integration matters greatly to Microsoft.

Without Lumia, there’s no chance for Microsoft in the mobile business. After spending more than $7 billion on Nokia, Lumia is a key piece of the puzzle for Microsoft. Lumia will drive the company’s success in both the lower and higher ends of the market, and will be a place where it can show off its latest software and cloud wares. There is no Microsoft mobile plan without Lumia.

Although Lumia will still play a crucial role in Microsoft’s product mix, the company anticipates using fewer people to get the job done. Microsoft announced recently that it will lay off 18,000 people, including 12,500 Nokia employees, as it tries to make itself more agile. The move was expected, but it doesn’t make it any easier for Nokia employees to take.

In the letter to employees, Stephen Elop twice said that he wanted Lumia to “make the market for Windows Phone.” He meant that he wanted to use the product line to build up Microsoft’s market share in the mobile operating system market and find a way to steal some share from Android. Again, the importance of Lumia in terms of overall market share cannot be underestimated.

One of the big issues for Microsoft is that it needs to bring more vendors into the fold in order to grow its market share. To do that, the company is using its Lumia products to show what it can do from a software and platform perspective and then hoping that vendors will follow its lead. We shall see.

If you’ve been following what Nadella and Elop have been saying about Lumia, it’s been all about experiences. The company continues to say that Lumia will be used to build “experiences” for users in ways in which people can interact with Windows Phone in a new way. While the “platform” is important, so too is the experience people have using Windows Phone.

Just because Nokia has been concentrating on lower-end devices, it doesn’t mean that the higher end of the market will be left out with Lumia. Quite the contrary. Microsoft has said that it plans to continue to deliver higher-end products to the market, like the Nokia Lumia 930, and it hopes to make some noise with the features it delivers to those products. While Microsoft might not be trying to kill the iPhone, it is definitely attempting to show that its operating system can also accommodate big, flashy products.