Microsoft Needs Some Phone Magic

Lumia 650 Reflects New Reality Facing Redmond’s Phone Business

Yesterday, Microsoft unveiled the Lumia 650, an entry-level business Windows 10 smartphone with a five-inch screen and powered by a Qualcomm Snapdragon 212. Starting at $200, it is a “value” device unlikely to make an immediate impact on the company’s mobile hardware fortunes. The phone doesn’t support Microsoft’s Continuum, a key feature of Windows 10 which would enable it to perform double-duty as a PC.

The price of the Lumia 650 sounds inviting, but in this market, $200 is quickly becoming the new $400. For example, Huawei’s Android-based Honor 5X, which also sells for $200, beats Microsoft’s newest phone in almost every respect.

The Lumia 650 comes just two months after the introduction of the $139 Lumia 550, another low-cost Windows 10 smartphone and one that has provided no tangible boost to Microsoft’s mobile market share despite the price. The two phones reflect Microsoft’s current approach to the market: they are solid, safe bets for businesses committed to Microsoft products and wary of the threats to security posed by Android devices.

Microsoft has found the reality of its position in the phone market a bitter pill to swallow. Last year, the company wrote off $7.6 billion of its acquisition of handset maker Nokia. A succession of uninspiring models won’t lift spirits in Redmond or raise its market share.

The market is waiting for something big from Microsoft; something that will whip up the doldrums into which smartphones have fallen. When Microsoft introduced its Surface devices in 2012, many were sceptical, yet the devices have gone on to become preferred hardware for many enterprises and consumers. Some of the Surface magic needs to rub off on Microsoft’s phones.