Windows Phone forecast slashed once again

When it comes to Microsoft’s Windows Phone operating system, market research firm IDC has long been among the few true believers. But the reality of tepid demand has repeatedly forced the firm to temper its enthusiasm.

On Wednesday, IDC lowered its expectations once again.

In its latest forecast for the smartphone market, the firm updated its predictions for long-term market share among the major smartphone operating systems. Per usual, the number that stuck out was the one IDC assigned to Windows Phone. In the new forecast, IDC expects phones shipped with Microsoft’s software to comprise 7 percent of the total market in 2018, up from 3.3 percent last year. The firm expects total shipments of Windows Phone devices to grow from 33.4 million last year to 121.1 million in 2018.

At first glance, that forecast may seem fairly bullish. IDC, after all, is predicting that Windows Phone’s market share will more than double in five years and its shipments will more than triple. But the prediction is actually quite modest compared with forecasts past.

As recently as September, IDC had much higher expectations for Windows Phone. Then, it forecast that the software would ship on 10.2 percent of smartphones in 2017. To hit that portion of the market, Windows Phone would have had to have been on about 170 million phones in 2017, according t0 last fall’s forecast.

But this latest forecast represents only the latest time that IDC has had to back off on a bullish forecast for Windows Phone. The firm’s initial outlook for the software, made in 2010, called for Windows Phone to have 20 percent share by 2015; essentially, the firm predicted everyone who was then buying a Nokia phone would buy a Windows Phone instead.

When Windows Phone failed to take off as IDC expected, it updated its forecast — over and over. An new forecast in 2012 predicted Windows Phone would hold 19 percent of the market by 2016. A forecast from later in 2012 reduced that expectation to 11.4 percent by 2016.

To my eyes, the newest forecast finally appears to be within the bounds of reasonable expectations. That’s because Windows Phone actually had a strong year in 2013, with shipments increasing 91 percent and its market share rising by more than a third. The software benefitted from the fact that Nokia, the leading Windows Phone vendor, finally began offering a portfolio of devices, rather than just one or two. It was also helped by Apple’s insistence on sticking to its strategy of refreshing the iPhone only once a year and its refusal to offer a truly low-cost model. Thanks to those factors, Apple saw its own market share in smartphones fall 3.5 percentage points to 15.2 percent.

If those trends continue, Windows Phone could well hit 7 percent of the market in a few years. But there are reasons reason to doubt they will.

Perhaps the biggest factor that could work against Windows Phone is the fact that Microsoft is buying Nokia. The fact that the most important Windows Phone device maker will be owned by the very company that makes Windows Phone could make other manufacturers even more reluctant than they already are to ship devices that run the operating system. If the move encourages those manufacturers to shift even more of their efforts from Windows Phone to Android, that likely will help keep Windows Phone sales in check.

IDC’s latest forecast implies that a good chunk of Windows Phone’s market share gains will come at the expense of Android. While the firm expects Windows Phone’s share to rise 3.7 percentage points between 2013 and 2018, it expects Android’s to fall 2.6 percentage points.

But IDC has been predicting for years that Android’s popularity will cool and its share will abate. And nothing of the sort has happened. Indeed, Android’s share of the market rose from 69 percent in 2012 to 78.6 percent last year.

As Android’s popularity has grown, the smartphone market has increasingly begun to resemble the PC market with one dominant provider and just one niche alternative. Despite the cheerleading from the likes of IDC, there’s been little indication that consumers as a whole really want a third alternative.

Photo, of the Nokia Lumia 1520 Windows Phone device, courtesy of Microsoft.

 

Troy Wolverton Troy Wolverton (248 Posts)

Troy writes the Tech Files column as the Personal Technology Columnist at the San Jose Mercury News. He also covers the digital media, mobile and video game industries and writes occasionally about Apple, chips, social networking and other aspects of technology. Previously, Troy covered Apple and the consumer electronics industry. Prior to joining the Mercury News, Troy reported on technology, business and financial issues for TheStreet.com and CNET News.com.