Microsoft Plays Waiting Game in Smartphone Race

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Microsoft Corp. has a new fix-it plan for the company’s smartphone business: Wait a little longer.

Microsoft’s $9.4 billion purchase last year of Nokia Corp. ’s mobile-phone business was billed as a way of reviving Windows Phone, the company’s four-year-old smartphone system. So far, it hasn’t been working.

The share of smartphones shipped last year that were Windows Phone devices slipped to 2.7%, from 3.3% in 2013, according to research firm IDC. The company of late has mostly released budget phones, a sector where growth is promising but competition is fierce. Many popular mobile apps aren’t offered on Windows Phone, or are subpar compared with versions for iPhone and Android devices.

At this week’s Mobile World Congress in Barcelona, an annual trade show for the mobile, telecom and tech industries, Microsoft unveiled some midrange phones. But the company is mostly talking up its coming Windows 10 operating system, which will power its next generation of devices.

Meanwhile, sales of Apple Inc. ’s iPhone continue to soar, and the major Android device makers like Samsung Electronics Co. and HTC Corp. are unveiling their own flashy flagship devices running on the Google Inc. operating system.

Stephen Elop , the former chief executive of Nokia who now oversees Microsoft’s devices group, says Microsoft is comfortable waiting. The pause in rolling out new, high-end devices is part of a planned strategy, and doesn’t reflect any internal development issues, he said in an interview in Barcelona. He promises a new flagship Windows phone will be on sale by year-end.

“It is a conscious decision to launch into the flagship tier with Windows 10 and new flagship devices,” he said.

Microsoft critics say the company is stuck in no-man’s-land, between Apple’s high-end smartphones and Android-powered devices manufacturers are cranking out in a wide range of choices.

Microsoft officials, however, say the company is playing the long game and banking on Windows 10, which it says it will release sometime later this year. The operating system will for the first time use a common software backbone for Windows personal computers, phones and tablets.

The idea is to attract people who are already users of Windows and its popular office software on their computers. Microsoft is betting they will find it helpful to use a Windows Phone, in tandem with their PC. It will also theoretically be easier for developers to make applications that work seamlessly on all Windows devices.

“Microsoft’s roots are in productivity, helping you achieve something, helping you get something done,” Mr. Elop said. The software unification under Windows 10 will instantly increase the number of devices that will feed off the same software, he said, something that should encourage more developers to write software for a platform that will reach hundreds of millions of devices.

“Windows Phones previously, as the challenging ecosystem, had a smaller number of devices out there,” Mr. Elop said. Company officials say Microsoft has the patience, skills and financial firepower to make Windows Phone work this time.

The benefit of Windows 10 across a user’s devices might make sense in business settings, said J.P. Gownder, a Forrester Research analyst. Microsoft also has talked about sophisticated security for Windows smartphones that should be especially appealing for corporations worried about their employees roaming around with vulnerable company secrets in their pockets. With Windows 10, “there could be a different argument to make,” Mr. Gownder said.

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