Microsoft claims 20% smartphone marketshare in Poland and Mexico, blames carrier subsidies elsewhere

Terry Myerson, the chief of the Windows Phone unit, has claimed the tech giant has managed to gain 20% of the smartphone market in Poland and Mexico, off the back of strong sales by Nokia.

In an interview with Reuters, Myerson also blames heavy carrier subsidies from major US telcos, including AT&T and Verizon, for Microsoft’s failure to gain market traction against Apple and Samsung in the US.

“[US carriers] AT&T and Verizon have been great partners. But where the market dynamics are different [with fewer carrier subsidies], and where the operators play a different role, we have done better,” Myerson says.

“[Subsidisation] is a compelling business model for them. If you are Samsung, Apple, AT&T or Verizon, it’s where everything’s working, you are growing share, you are growing profits. If you are an incumbent with a successful business model, you’re not going to be jumping to throw it out.

Carrier subsidies see a phone such as the Samsung Galaxy S4 – which has an outright price of $899 – subsidised in exchange for the consumer taking a 24-month contract.

“I don’t think we’ve come near to the full potential. Those are our two dimensions here, Office and Xbox. We want to bring to life getting work done and bring to life that serious fun, here on this thing in your pocket. That’s going to develop over time.”

As SmartCompany reported yesterday, Microsoft’s largest smartphone hardware partner has come under increased pressure from shareholders over its use of the Windows Phone platform.

Myerson’s defence comes after comments by Microsoft co-founder Bill Gates in February, which criticised Microsoft’s smartphone strategy.

“We didn’t miss cell phones, but the way that we went about it didn’t allow us to get the leadership. So it’s clearly a mistake,” Gates said.

When Gates was asked for his thoughts on current chief executive Steve Ballmer, he gave the Microsoft chief credit for many of the innovations the company has introduced over the past year.

“Well, [Ballmer] and I are two of the most self-critical people you can imagine. And here were a lot of amazing things that Steve’s leadership got done with the company in the last year. Windows 8 is key to the future, the Surface computer. Bing, people are seeing as a better search product, Xbox,” Gates said.

However, despite the praise for Ballmer, Gates admits he is not satisfied with the pace of innovation at the tech giant.

“But is – is it enough? No, [Ballmer] and I are not satisfied that in terms of, you know, breakthrough things, that we’re doing everything possible,” he said.

The comments by Gates were taken up by prominent critics of current Nokia chief executive Stephen Elop, including the outspoken former Nokia executive Tomi Ahonen, who used the comments to criticise Elop’s decision to use Windows Phone 8 on the company’s Lumia smartphones.

“Bill Gates tells the world now, in February 2013, that the Windows Phone strategy for Microsoft has ‘clearly’ failed and cannot succeed, ever,” Ahonen said.

Ahonen links the lack of market leadership for Windows Phone 8 to the company’s decision to purchase and integrate Skype, which has been met with apprehension from phone carriers.

“Ever since Microsoft bought Skype in a year and a half ago, that the strategy was doomed. It is no secret!” Ahonen said.