Microsoft admits to ‘lower than expected’ sales of Windows Phone 7

By Tom Warren, on 4th Oct 11 12:45 pm with 78 Comments

Microsoft CEO Steve Ballmer

Microsoft admitted on Monday that initial sales of Windows Phone 7 had been lower than the company anticipated.

Microsoft CEO Steve Ballmer previously admitted that sales had been “very small” during his keynote address at the Worldwide Partner Conference earlier this year. “We’ve gone from very small to very small but its been a heck of a year,” admitted Ballmer. “A year ago, Microsoft had no Windows Phone. In the last year we’ve sold millions of phones.” However, Ballmer stopped short at saying that the sales had not met company targets.

Microsoft’s proxy statement to the U.S. securities and exchange commission on Monday reveals that initial sales of Windows Phone 7 devices were a factor in Ballmer’s bonus for 2011:

“Appraisal and other relevant information considered by the independent members of the Board, including: Mr. Ballmer’s performance against his individual commitments; the operating income performance of the Company relative to 25 large technology companies (a group that includes most of our Technology Peers); successful product launches including Kinect for Xbox and Office 365, enhancements to Windows Azure and Bing; continued progress positioning the company as a leader in the cloud and cloud-based infrastructure; key partnerships with Facebook and Nokia; significant progress in development of the next generation of Windows; work toward the successful acquisition of Skype; lower than expected initial sales of Windows Phone 7; the 2% decline in revenue for the Windows and Windows Live Division; the need for further progress in new form factors; and an overall strong financial year in which Microsoft reported record revenue of $69.9 billion, record operating income of $27.1 billion, and record earnings per share of $2.69 representing 12%, 13%, and 28% growth, respectively.”

Ballmer picked up 100% bonus, out of a possible 200%, and a pay rise of 2%. Despite the admission, it’s not all doom and gloom for Windows Phone. Microsoft recently released its Windows Phone 7.5 update for existing devices. The company revealed on Monday that it is now available for 50% of devices and all devices are expected to receive the update by the end of October. Nokia is also expected to unveil several Windows Phone devices at its Nokia World event in London later this month. Microsoft’s Windows Phone 7.5 update is sturdy upgrade that brings the platform on par with its competition. With 30,000 apps in the bank, and the focus on developers, Microsoft will be hoping that its “Mangofied” apps really start to take off shortly.

  • Manish

    But WP7 will catch the fire and boost itself

    • http://twitter.com/rameshthanikodi Ramesh Thanikodi

      yeah, windows phone 7 has already caught alot of attention in the blogosphere.

    • Guest

      Or as Elop stated it maybe this platform burning too… time to jump to something more viable then WP7

  • Anonymous

    The OS is great and deserves better recognition than it has received.  I think a combination of few devices out there and lack of sales rep. knowledge have hurt it initially but it should pick up in 2012 now that these issues are being addressed.  One other thing to consider is that I hear and read a lot of comments about people picking one up as soon as their contract is up, or in the near future so that could be a big factor in first year sales as well.

    • Ukwizard007

      Maybe, MS/Nokia should do some background analysis with network providers to know the nos of how many customers are due to renewal and release their phones accordingly :)

    • Anonymous

      They need to get a better relationship with the carriers. Android became big because of the marketing campaign from Verizon. When the Nexus One came out, only a few geeks cared about Android. When Verizon started running the droid campaign and attacking AT&T (and indirectly the Iphone), Andoid sales took off.

  • forZune

    Mangofied…. good but they should not have stopped a plan to make new zune player

  • Anonymous

    if they didn’t have shit phones, i would buy one right now.  keep giving us last years specs in a multi core/hi res/3d generation phones and we forget all the metro goodies of windows phone.  Or is it the OS itself that cant handle the hardware?

    • GP007

      The OS can handle the hardware fine, OEMs aren’t willing, util Nokia at least, to push behind it 100%.  So we get these “lower” end devices.   Of course on the other hand WP doesn’t need dual core to run silky smooth so few people will even notice a change with a 2nd core.

    • Anonymous

      Windows Phone OS definitely doesn’t need dual/quad core processor(s)….but… think of it more of as a marketing gimmick (this is where Microsoft…just doesn’t get it). Ppl fall for the dual/quad core crap…and would pay xtra (even though the OS doesn’t need it – but would be future proof)…they would buy in to it…just because their current device is supposedly high end/top of the range.

      But… what Windows Phone could really do with, is the extra storage…..32GB & 64GB. This would also further help Microsoft in marketing their devices (hopefully Nokia will address this in the next 6 months).

    • Anonymous

      Yes, WP doesn’t need dual core to run smooth but we also have to consider the app developers who would like to use this processing power.

    • Anonymous

      most won’t. that’s like saying we should penalize 99% of apps that are linear just to help 1% of apps that are properly parallelized. phone apps are on very low budgets and even lower coding standards. few developers will justify the added cost and complexity of multi core programming. those that do, will likely prefer gpu acceleration. multi core phones are juts a gimik. if what you want to do is just play music, the cpu% usage of that is so low that it is irrelevant.

      what we need is better single thread performance and performance per clock. a 2ghz cpu will yield a better experience than a quad core 1ghz since 99.9% of apps are single threaded and the law of diminishing returns makes most parallel app dev financial suicide.

    • http://twitter.com/laserfloyd Lewis McCrary

      The OS can’t do multi-core yet but I am starting to agree with you.  Even if the current OS can’t handle it, go ahead and start making them.  Surely the next version (Apollo) would be able to utilize the cores?  Until then, focus on the buzz that techies want; top of the line hardware.  I will pass on 3D though.

    • Anonymous

      lets not forget beneath the windows phone is just a slim down NT kernel fully capable of handling as many cores as you throw at it. The reason MSFT hasn’t put out a chasis for multiple cores is that none of the existing processors match their minimum standards for battery life. google does it because google doesn’t care about experience and if your phone runs dry in a hour, they tell you you’re using it wrong, hack the firmware to turn off cores etc. That wouldn’t fly for msft which is trying to keep the experience to the consumer simple and good.

      the bottom line is that dual core cpu’s are coming to wp once they are efficient enough or batteries to last the minimum amount required under the kind of usage wp labs decide should be the standard.

      for now, dual core phones are just a waste of money and power and wp7 apps will benefit more from the single core 1.5ghz cpu than from two cores. let’s not forget the pc has had multiple cores for years yet few apps even take advantage of multiple cores even after nearly a decade because parallel programming is so tough and the returns are significantly lower per core. single thread speed is more important and provides the biggest bang for the buck overall. It will also have a more perceived impact on the UX because most app programmers just create linear code. If you need raw power, use the GPU instead.

      If given a choice, I much rather have a single core 2ghz cup than a dual core 1.5ghz one. the <1% of apps that will even benefit from the parallelization isn't enough to justfiy penalizing the 99% of single threaded apps most users run.

    • Entegy

      WP7′s kernel is not NT, it’s still CE, and a version that doesn’t do multicore.

    • Test1ngi23

      “google does it because google doesn’t care about experience and if your
      phone runs dry in a hour, they tell you you’re using it wrong”

      Actually Google doesn’t tell the manufactures anything. They can’t since the manufacturers are downloading the OS, customizing it, and installing it for free. Is it Microsoft’s fault if you install WindowBlinds and it f*cks up your computer? It’s not the OS maker’s fault if the middleman messes with the code.

  • http://twitter.com/karlcramer Karl Cramer

    This is no surprise. MS did a great job with the OS but stumbled at the point of sale. As an owner and enthusiast of Windows Phone I stop by phone stores to see how they’re marketed. Most don’t have them in stock and the sales people try to steer you to an Android phone.

  • Anonymous

    Why are all WindowsPhones limited to 16GB? Where are the 32GB and 64GB high end models?

    • http://www.facebook.com/todor.tsvetkov Todor Tsvetkov

      In Nokia’s warehouse … waiting for our money ^^

    • Anonymous

      cost.

    • Biased

      Could be that MS’s strategy is Skydrive and that you won;t need the storage capacity if you can host the music through your data connection.  With that said, Most of the storage capacity in my Trophy goes to music and it is more than enough for me.  You end up realizing that your shuffle-all works out a lot better because you end up removing a lot of the crap you didn’t want to hear anyways.

    • Anonymous

      My ultimate dream is to store my entire music library on SkyDrive and stream it through Zune. The Zune app would automatically make it all available to me because I’m already signed in to my Live account. I’m perfectly willing to pay $50/year for 80GB.

    • Guest

      Apple has bought up much of the world’s flash supply. They’re also famous for over-committing so that competitors have trouble sourcing. Then they cancel or scale back those orders. So my guess is that with limited availability, many of the OEMs are prioritizing the higher capacity configs in their best selling models: Android. 

  • http://www.gamerelatedblog.com/ StriderNo9

    The “really” commercial was great but nothing came after that, and then its the hardware, which has been good but not great. I’m a MS fan, I think they have great ideas and products but they have their head up their ass

  • Test1ngi23

    As an Android user, I have to admit that its animations are butter smooth! They sure got the graphics performance down pat. However, to me and many others like me, the smooth animations are the ONLY thing they have going for them. If I’ll never use Office or don’t have an Xbox, why should I get a WP7?

    • Anonymous

      You are failing to mention a more organized experience all around.   Apps that are available to every handset (except for Samsung or HTC exclusives etc.), no asking “Will Netflix run on my phone? Does it crash a lot?”  or similar about apps.   There are many reasons why people like WP7 other than Xbox or Office.   You may prefer your UX to be different than your friend who has the same hardware but a different rom, some of us don’t like the problems that come from having so many different UIs on one OS.  The biggest problem my wife has with Android is that it is very unstable,  games crash all the time for her,  she is sick of trying to find new roms that always have something broken in them and she is using one of the most popular Android devices out there (a galaxy s variant) and still has games and apps that won’t run on her device.  She hates having to close everything that runs in the background just to get half decent performance out of it.

      I too had a nightmarish time with Android but that is now over so I have started repressing those memories.

      I will say this, Android, like Linux serves it’s purpose. It is interesting to tinker with new roms and new beta software, but I do this on my home pc already. I need a phone that will work all the time, that I don’t have to flash multiple roms to get what I want out of it.

    • Guest

      He’s a troll. Of course he isn’t going to mention those.

    • Test1ngi23

      Just like you and your wife have had bad experiences with Android, I’ve had nothing but good experiences with mine. I honestly have never had a built-in app crash before and I’ve been using mine everyday for the last 8 months.

      BTW, why are you always installing new ROMs on it? If your device becomes unstable due to flashing a custom ROM onto it, I fail to see how that’s Android’s fault. If you are installing custom firmware (hacking), wouldn’t you expect that stability issues might result? It’s the same on any electronic device.

    • Anonymous

      Never had an app crash (in-app or otherwise) in Android? Never?? Ever???

      I am rendered speechless by your Audacious Statement!!

    • Anonymous

      How about all the standard features built in to the phone. These features require you to buy separate apps on other platforms. Since they are integrated, the work better then a separate app.

    • Test1ngi23

      I just wanted to point out the most of the apps to add most of the missing functionality are free. Twitter, Facebook, Foursquare, etc. are all free.

    • Anonymous

      Dude – integration of social networking provides value to customers. Which is why Windows Phone integrates FB, Twitter & LinkedIn.

    • Anonymous

      But I don’t HAVE to launch an app to experience those networks.  It’s all in my phones OS and is all integrated.  That might not seem like it’s THAT much of a huge difference but it is.  I can do what you do in your apps FASTER and get back to my life.  App’s are a waste of time when live tiles and WP7 do everything an APP can do BUT BETTER!

      Also, if there isn’t direct integration for a service (Amazon, Ebay) the OS knows to call those apps and can seamlessly bounce back and forth between the APP and the OS so that you’re unsure you’ve even left the OS and launched an APP.

    • Anonymous

      True, but I prefer them to integrated. That way the apps interact with each other as opposed to stand alone apps.

  • Joel Job

    Could it be one of the following reasons ?
    - Mobile phone market saturated – every stuck on a 2 year iPhone contract with their ISP ?
    - All keen on owing a WP7 is waiting on Nokia to produce a quality phone ?
    - Hardware too expensive, expecially in foreign markets ? (I am South African and with import duties these phones are ridiculously expensive)

    To me the WP7 OS is great, but we need affordable phones to run it on.

    • Ukwizard007

      I believe, when Nokia launches their WP7 phone in asian market, especially India, it is going to be a huge hit (especially with low end devices – I believe Tango). India has got 70 million mobile phone users and mostly they like Nokia phones. It would be interesting to see how Nokia markets their WP7 phones

    • http://www.facebook.com/todor.tsvetkov Todor Tsvetkov

      In Bulgaria the hardware isn’t that expansive… the Samsung Omnia 7 cost 600$ while the iPhone 4 was 800$, now the iPhone costs 700$ and my Omnia7 is 250$, so I think here it’s not that expansive :) 

  • Binlid

    Sales are higher than expected in my opinion, given the marketing strategy MS adopted….which was somewhere between non-existent,  completely out of touch, and incompetent.
    I love my WindowsPhone but most people that I know are not aware of it and if they are aware they have no idea of its value. They think it is Windows on a phone and are therefore dismissive not compelled to look closer.
    So given the marketing own-goal I am impressed that MS has sold millions.

    • OMG55

      I agree with what you saying 100%, but there are things we can do if we are true to WP7. I began my cruzade Sunday night by recording and posting a video of me showing off some of the many features of windows phone on my facebook. We can all do this lets start today! Don’t wait for commercials or advertisement, because as you can see, there none existent. I also showed co-workers the phone and its skydrive access from the phone and a PC. Get involved by posting video’s of you operating your phone on social networking sites (millions of people can be reached this way). Please encourage everyone you know!!!

    • Guest

      “They think it is Windows on a phone and are therefore dismissive not compelled to look closer”

      Good point! It should never be called a “Windows Phone”, which is a big marketing drawback!

  • Guest

    There is still not a sufficient level of marketing outside of the technical journalism world to really push Windows Phone.  I could understand why with 7.0 that they may have opted for a “soft-launch” but to make any sort of significant impact in the mobile space they need to have an avalanche of marketing activities waiting, presumably, for the launch of the first Nokia devices.  If they don’t push Windows Phone 7.5 hard at that point then they really need their heads examined.

  • rsgx

    To be honest, Nokia needs to pull one out of the bag and MS needs to put out a GOOD marketing campaign if the platform is to go anywhere.

    As long as they keep developing the platform, I don’t really care how big or small it gets.

  • Keithfranklin

    I want to know what I am missing with my hardware. I have a HTC HD7 and it performs great.  I know some new hardware capabilities will be added this year like front facing camera and other sensors, but I dont see any reason why my sisters iPhone 4 would be considered any more advanced hardware wise.  Educate me on what I am missing.

    • rsgx

      The iPhone 4 looks like a unique, premium phone.

      My Mozart doesn’t, and neither do most HTC and Samsung phones.

    • Anonymous

      Hardware wise. You just said it, front facing camera/sensors/processor/display/etc… Don’t get me wrong, I hate my iPhone, but if you can find me any windows phone that can do higher than 480×800 res… “What’s wrong with Microsoft” is the more obvious question

    • http://profiles.yahoo.com/u/6G3ZZJCHOLYP3S5CRCIHQ7WDSE MVIM

      The problem is that, despite its extensive use of XAML, Windows Phone cannot render fixed-pixel objects at higher resolutions. The ways you can define layouts in XAML don’t guarantee that any app will scale and reflow properly. I imagine it will not ever support another resolution greater than 800×480 in its lifetime. If/when Windows 8 merges into Windows Phone 8, that should introduce the ability for the OS to support higher resolutions screens.

    • Anonymous

      Anything higher than 800×480 is pointless on a < 5" device. People do not look at a phone close enough to benefit from the added pixels. Heck, most computer screens don't even have near half the pixel density of the HTC HD7 (480×800 @ 4.3"). I don't understand what Apple was thinking with the retina display. It's complete marketing bullshit and serves no real purpose other than to tax the GPU and drain the battery.

    • OMG55

      I currently have the iphone 4 and the Samsung Focus with Mango; my focus is better than my iphone. I’ve also had the iphone 3GS and I have issue with the freezing, locking-up, rebooting, and the battery life is horrible. Don’t get me wrong, I’m not bashing, I’m just stating problems I have with the device (Oh, and I’m not a heavy app user). Since Mango, WP7 has really come alive and is eye-catching (at least the focus is). The focus may not not be constructed our or aluminum or brush steel, but it’s still a beatiful device.

  • http://www.facebook.com/luis3007 Luis E. Padilla

    Apple iPhone: 130+ countries with full services/options in most of them.
    Google Android: 130+ countries with full services/options in most of them.
    Windows Phone 7.5: 35 countries with full services/options in the US only

    As long as this isn’t fixed Windows Phone will remain a non-entity with less than 5% worlwide!!

    • Anonymous

      Isn’t this supposed to be the goal of the Nokia deal and Tango updates?   I really hope they do address it.  I am in the U.S. so I don’t have that problem but it still sucks that others don’t get as great of an experience around the world.

    • http://www.facebook.com/todor.tsvetkov Todor Tsvetkov

      The goal with Nokia is the hardware and the hype for the new Nokia devices, Tango is for the poor countries like China, India etc., sadly that doesn’t have anything to do with expanding Zune or Bing :( there will be some marketplace expansion and some additional languages, probably Bing available for 2-3 contries but personally I don’t expect more = Let’s hope I’m very, very wrong =

    • Anonymous

      Part of the Nokia deal is to expand Microsoft’s reach into other countries since Nokia already has experience and negotiation power there.  Nokia’s mapping solutions are already present there so they can be applied in those situations.  There is much more to the Nokia deal than just handsets.  Tango is a two part update.  They stated the update was to bring more services to more countries as well as expanding into China and India.  Ovi music will be offered in areas that Zune has not negotiated for yet.

    • Lord Jem

      i jus wana be able to buy freaking apps outside the US

    • Anonymous

      good point. the phone is excellent if you’re a US consumer. otherwise you sort of get a half baked experience. They sell windows in every contry on earth with full options and services in most of them. why can’t they do the same again.

    • http://twitter.com/LachlanCMcLeod Lachlan C McLeod

      they dont want all services to be there unless they are “microsoft” services.. like bing, skydrive and all that stuff.. its how to make a crap load of money..

    • http://twitter.com/teusje teusje
    • Guest

      Where were they after one year?

    • Lord Jem

      yea they definitely need to expand and beef up their marketing campaign… i own a mozart out of the states and the limitations can be frustrating at time for example… unable to purchase apps with out US account

  • http://www.facebook.com/people/Viki-Maverick/100002523433166 Viki Maverick

    Microsoft needs to take a page out of Apple’s book (read marketing) for WP7 to succeed. Its sad to see such an awesome operating system not getting the reception it deserves.

  • http://twitter.com/efjay01 Ef Jay

    They will continue to see low sales as long as they refuse to advertise. The HTC Titan is reported as starting to be available in multiple countries, yet there is no sign of any advertising to capitalise on its unique selling point, or the release of the updated OS. If MS is so lacking in conviction that they release such a handset with no fanfare at all they should not be surprised one jot if sales dont pick up.
     
    I wonder if they are scared, because they certainly dont seem shy when it comes to the Xbox, Kinect or Windows.

  • Anonymous

    The only thing keeping me from getting one is device selection on my carrier Verizon.  Now with Mango out, I want  one with the FF camera, which the Trophy doesn’t have.  If something like the Titan came to Verizion, I would surely buy one.

  • s b k

    For me the issue is selection, I am on Sprint and they only have one option. I really want to upgrade but it would be nice to have a few different devices to choose from, I hope they all more of a selection for all the carriers not just a couple. 

  • Anonymous

    Where the advertising? 

  • Mrdeezus

    I’ve got an answer for MS, release more devices we want with ff cameras, 16,32 and 64 gb memory. Larger screens…larger screens. This is the only reason i dont get a windows phone. If they dont release a phone with these specs soon, i will be upgrading to another android device. I will wait until Dec. 1st. Also, need the phone 4g on sprint.

    • OMG55

      Larger Screens and FFC I agree on, as  far as more memory, that is questionable. If MS is planning to store your music, docs, videos, etc on the skydrive cloud, is memory realy necessary???? Why do you think Apple is getting the icloud ready??? So the phone won’t be dependent on memory for storage. And who’s been working on the cloud for years…Microsoft.

    • Mrdeezus

      i understand the logic but i dont want to stream music on my phone. Have you tried this in a gym or while working out? Give us both ill store music on cloud but i need 32 or 64mb internal memory od microsd card slot.

    • Paul Wharmby

      Bigger screens? What’s the largest screen on a smartphone? HTC’s Titan and Sensation XL. These are essentially identical so, by your own admission, you’ll be getting a Windows Phone. Welcome to the club!

      Incidentally, HTC’s home page has the phones in this order: Sensation, Sensation XL, Rhyme, Titan. If we’re talking about marketing, surely the manufacturers need to chip in. HTC also sponsors movies on Channel Four here in the UK, The phone? The Sensation again.

      Down on the farm, both the fruit farmers have to advertise. On the Forbidden Planet the manufacturers know they have to, becaue they’re getting the OS for free. No-one seems too sure who’s doing what with WP7. They need to sort it out, and quickly, or the best smartphone os out there will die.

  • Anonymous

    #1 – Get the HTC Titan and Nokia phones out
    #2 – Get some advertising on the air! I have yet to see a single WP7 commercial!

  • Anonymous

    The OS is great, it just needs some really good marketing to be able to compete. I know I wouldn’t switch from WP7 to any other OS, specially since Mango.

  • Guest

    ACTUALLY, it wasn’t Windows Phone7 OS at fault here. 
    In the beginning when a person go to a carriers store to buy a Windows Phone7, the salesperson would steered you away from buying one and instead offering you iphone or android phone.  This hurt the sales of Windows Phone tremendously.

  • http://twitter.com/IceXPR Julio Colon

    I walked into Best Buy and Target this weekend and none of them had a device on display for customer to try them.  How are they suppose to sell them online to consumers?  Online?

  • http://twitter.com/abhi1manyu Abhimanyu Jamwal

    isn’t this old news…probably around 2 months back when steve balmmer said the microsoft was in the phone OS for long but the sales were not as good as they had expected?

  • OMG55

    I love this site, but why are we re-releasing this news story? This was admitted by Ballmer at the Developer’s conference. Are we trying to smear WP7 on the day the iphone 4S or 5 is being released? Or is this a motivation tactic used to tell us to do something??? If so, I’ve already post a video of me demostrating some of the many features of WP7 Mango on my facebook in an attempt to get word out since carrier are not advertising WP7. Radio isn’t advertising either; all they talk about is Android and Apple. Come on everyone, make videos and post them on you favorite social networking sites. This reaches millions of people fast. I’ve receive nothing but positive responses from people since they seen my video.

  • OMG55

    Please put the latest news out. This site has been very good at getting updated information, but today is not one of those days. Ballmer stated this at the developers conference. Today news should be that Elop confirmed that Nokia’s first device would be this quarter, not this story. WPCENTRAL has the Elop news posted.

  • http://twitter.com/abhi1manyu Abhimanyu Jamwal

    apple just nuked itself….the iphone 4s is same and i think the game can change if microsoft can get some stunning ad campaign along with coolest devices and loads of quality apps, its going to be hell of a ride for wp7…..my bet, get the subsidized prices on the floor rather than being competitive….that could be killer, i mean microsoft owns the largest mobile manufacturer(nokia) they can play this game

  • Anonymous

    Here’s a rumored pic of the Nokia SeaRay: http://www.fonearena.com/blog/42635/is-this-the-nokia-searay.html

    Looks smexy!!!!

  • Anonymous

    How is the voice control on the windows phone? The iphone 4s announcement was underwhelming, but the Siri voice control looked good and it is a feature that is important to me, especially while driving.

  • Anonymous

    I think they need to upgrade their hardware too…if they wanna keep up with everyone else…even if it means taking it one step further…