The future of Microsoft’s smartphone business is in question after the company revealed its Lumia handset sales dropped sharply in the latest quarter.
Though Microsoft’s phone business has been struggling for some time now, the company’s sales figures appear to finally have stepped off the cliff.
Microsoft said Lumia sales plummeted more than 70 percent year-over-year in its third fiscal quarter to just 2.3 million. Sales of other phones also dropped off from 24.7 million in 2015 to just 15.7 million this year.
Accordingly, phone revenue dipped 47 percent, dragging down overall device revenue by 11 percent. Surface revenue, however, proved to be a bright spot, increasing 56 percent on the back of the Surface Pro 4 and Surface Book release in the second fiscal quarter.
During its earnings call Friday, Microsoft admitted the outlook for the Lumia is pretty grim – at least for the next quarter.
“In devices, we anticipate continued momentum and growth for Surface Pro 4 and Surface Book, particularly with business customers,” Microsoft executive vice president Amy Hood said. “For phone we expect year over year revenue declines to deepen in Q4 as we work through our Lumia channel position.”
Interestingly, though it touted the fact that more than 270 million devices are now running Windows 10, Microsoft was mum on the specifics of its mobile plans for the platform. In fact, Microsoft has already set a date less than two years away for the end of its support for Windows 10 Mobile. The update bringing Windows 10 Mobile to select existing handsets was just released last month.
Then again it may not be such a huge loss as the most recent figures from Kantar Worldpanel show the Windows operating system accounted for just 2.6 percent of the smartphone OS market share as of the end of February.
All things considered, it will be interesting to see just what it looks like for Microsoft to “work through” its Lumia problem.
