Failure of Windows Phone and Network Effect
https://www.theverge.com/2017/10/10/16452162/windows-phone-history-glorious-failure
https://www.statista.com/statistics/266136/global-market-share-held-by-smartphone-operating-systems/
Recently, Microsoft officially stopped developing and maintaining Windows 10 mobile and removed all Windows Phones from its online store. It meant that Windows Phone was finally defeated in the competition of mobile OS and, Android and iOS won the competition. Starting from WP7 which is the earliest modern mobile OS developed by Microsoft, it gained a lot of praises from press and users. It adopted a modern UX design, different from iOS and Android and ran very fast and fluently. A significant number of users loved this modern design and were willing to buy a phone that ran fast at a reasonable price. Compared with Windows Phone, iOS ran very fast but Apple did not provide a cheaper option and Android had a lot of cheap phones but they ran relatively slowly. Windows Phone provided consumers with an option to buy a cheap phone that ran fast. Even though these advantages existed, Windows Phone still failed to gain a part of market share. It is can be explained by the network effect that we covered in the class.
If we consider users of mobile OS form a network, the network effect plays a very import role in this network. One of the most important problem that Windows Phone had was that there were very few apps in Windows Phone OS. The developers were reluctant to develop a Windows Phone version because the number of users of Windows Phone was too small compared to iOS and Android. The existing iOS and Android users also did not want to switch to Windows Phone because they could not communicate with other iOS and Android users due to the lack of apps. The direct-benefit reason of the network effect is very important here. When a large percent of your friends are using one mobile OS, you are willing to switch to that OS because you can then communicate with your friends by apps such as Facetime or iMessage. The fraction of people using Windows Phone initially is too small to pass the tipping point in this network. Moreover, for Windows Phone, the tipping point at a regular market price was very high. Mobile OS was different from other products. The main payoff of choosing a certain Mobile OS is from its network effect instead of the Mobile OS itself. Although Android was slower than Windows Phone, a large number of people were using Android so that the payoff from the network effect is very large. Microsoft itself also knew this fact and tried to save Windows Phone based on it. It announced a smart phone with the best camera and several really cheap smart phones. With this effort, the market share of Windows Phone reached 3 to 4 percent at its peak around 2013. However, it still did not surpass the tipping point so it turned out that the market share of Windows Phone fell back to 0.3 percent in 2016. Therefore, the tipping point of network effect explains the failure of Windows Phone.