Windows Phone: Microsoft’s really good reason to keep it going isn’t about phones

The Overspill: when there's more that I want to say


Important equations. Photo by the waving cat on Flickr.

The abrupt departure of Stephen Elop as leader of the hardware devices business at Microsoft, which will instead be united under Terry Myerson, creates a big, obvious question: is Microsoft about to kill the Lumia smartphone business that it bought from Nokia for $9bn?

Let’s go through the arguments for and against.

Kill it because: the Windows Phone business loses money hand over fist – no phone maker, including Nokia, has ever managed to make it profitable. My analysis of its financials suggests that in Q1 it was losing around $40 per handset even if you assumed that featurephones made zero profit. Even assuming a loss per featurephone, the calendar Q1 (fiscal Q3) figures still showed a $29 per handset loss, even with generous assumptions about marketing and ignoring goodwill writeoffs.

And Microsoft has warned that it’s going to…

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