Will Windows Phone Be HTC’s Final Mistake?

Published on Author Eli Fennell

Citing unnamed insiders, sources for Bloomberg are reporting that Microsoft is in talks with HTC to make Windows Phone an option on their Android line of smartphones.  There is no indication whether this would involve a dual-boot option, or possibly allowing customers to choose their preferred OS at time of purchase, but since dual-booting would take up additional memory space on the device, the latter is probably more likely.  In exchange Microsoft may reduce or eliminate their licensing fees.

For a cash-starved company like HTC, what could be wrong with this deal?  Assuming the license fees are waived, HTC can continue to make Android smartphones which sell, while taking a no-risk gamble that some might prefer to have Windows Phone on their new toys.  It’s either a win for HTC, or a harmless loss, right?

I’m reminded of another company struggling in the smartphone market, a company which took a gamble on teaming up with Microsoft for a lineup of Windows Phone devices that were set to take the market by storm: Nokia.  We all know how that story ended.  For Nokia it seemed like a great deal, too: Microsoft would foot the bill for a blitzkrieg marketing campaign and reduce their license fees.

They marched giant Windows Phones through the streets of New York City, gave away free (on contract) Windows Phones in Microsoft stores, and even resorted to magic (Nokia’s “Everyday Magic” marketing campaign).  In the end they literally couldn’t give them away.

Sure, in a few markets due to steep margin-slashing, Nokia’s Lumia series devices have gained some traction, but when you give away high end smartphones at low to mid range smartphone prices, and your bragging point is breaking 10% of the market in some places while still managing to lose money overall, you’re hardly taking the world by storm.

In the end the failure was not on Nokia’s part, their devices were beautifully designed, but Microsoft’s.  Windows Phone is a solution in search of a problem.  In terms of apps, it remains laughably far behind the standard, with fewer apps and even fewer quality ones regularly maintained by developers.  In terms of User Interface, pick your poison, it’s not a quantum leap over iOS or Android even if you aesthetically prefer it.  Android fans will also point out that a simple Android skin can make their phone look just like a Windows Phone (and they’d be right).

It’s not just that Microsoft is essentially unnecessary and playing catch-up in the market, it’s that no one really cares.  When was the last time anyone you knew in real life ever said, “I love my iPhone, I just wish I could use Microsoft Office on it!”?  I’m not saying it never happens, but it just isn’t a problem most people are having.  Microsoft has an image problem.

HTC on the other hand has proven with their latest One smartphone that they can still create exciting devices.  Their advertising campaign with Robert Downey Jr. has been underwhelming, but it’s a step in the right direction.  They’re finally ready to ditch Beats Audio.  Now is the time for them to focus on doing a few things well.  Committing to a dual OS strategy would be just another marketing gimmick like Beats, Windows Phones, 3D phones and even Facebook Phones.

One sinking ship cannot drag another to shore.  HTC needs to fix their own problems before they can fix anyone else’s.  They should learn from Samsung’s focus on a consistent brand of exciting flagship Android devices, from the Galaxy S through their latest S4 and Note 3 devices. Windows Phone might never become more than a minor player, so let Microsoft use their new Nokia acquisition (once the pipeline is clear) to show what they can do, while HTC should take that time to churn out a consistently exciting line of Android devices with a focused message.

If they split their chips between Android and Windows Phone now, they’ll lose whatever momentum the HTC One may have given them in terms of buzz factor and innovation, and just end up confusing their own potential customers.  They can’t afford to serve two masters any longer.