My colleague Javier Lacort recently discussed the need for Microsoft to pay more attention to developers. I believe it needs something to do something even more important.

It needs its own mobile device. A new Windows Phone.

The rationale behind this is simple. The company appears to be banking heavily on artificial intelligence for its future, which is evident in its investments in OpenAI and global data centers. However, this might not be sufficient.

It doesn’t matter that Microsoft’s “co-pilots” are everywhere, or that they’re prevalent in Windows 11, Azure, and Microsoft 365, or that they’ve become a striking yet disturbing selling point for the new era of Copilot+ PCs with built-in AI.

It doesn’t matter because PCs can’t rival mobile devices.

And Microsoft is a nobody when it comes to phones.

The (sad?) reality is that Google and Apple dominate the mobile phone market with Android and iOS, while Microsoft’s role in this arena is minimal. The company merely offers access to its own ecosystem, recognizing that they’ve lost the mobile battle.

Bing can’t compete with Google. Outlook is also less relevant now that Gmail and Mail are pre-installed on Android and iOS phones, respectively. The same applies to many other tools in those ecosystems.

Image: Cade Lin

It doesn’t matter if they’re better or worse than tools for Android and iOS: The comparison isn’t on an even playing field because of the presence of pre-installed native apps that support Google and Apple's platforms. The key factor here is the overall ecosystem, where Microsoft’s mobile platform is currently not very relevant.

The situation isn’t only disappointing in retrospect but also concerning for the future. Microsoft was already behind in the mobile technology race even before acquiring Nokia and long before giving up on its mobile efforts.

The consequences of this have been significant for Microsoft, and the gap continues to grow wider. Every day the company spends without its own mobile platform results in a loss of relevance and revenue for the company.

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Despite this mobile setback, the company has performed reasonably well. Currently, Microsoft has the highest market capitalization in the world, but it has the potential to be even more influential.

Its commitment to artificial intelligence presents a significant advantage. However, it’s unlikely that these efforts alone will help Microsoft win over mobile users, given that Google and Apple are strong contenders in this arena. Google has already revealed its plans with Gemini, and Apple is said to be planning to present its new AI features on Monday at 2024’s WWDC.

In both cases, the future is certain: If artificial intelligence proves that it can indeed be useful, Google will likely provide the AI for Android phones, while Apple will supply the AI for iOS phones. Both companies would want to maintain control over such a critical aspect of their business.

In fact, Microsoft is already concerned about this, and for good reason. When OpenAI recently unveiled its new conversational AI model, GPT-4o, it initially offered ChatGPT clients for iOS and macOS. The AI company only mentioned Windows support to say it’s coming “later this year,” without a specific timeline.

How can this be possible? It appears that OpenAI didn’t consider that Microsoft had invested billions of dollars in it. When native apps were released, which included flashy “talk” options for ChatGPT, the company co-founded by Sam Altman chose to ignore the situation. Their reasoning was that they were simply “prioritizing where our users are.”

Microsoft Should Go Back to Manufacturing Phones

That’s a very bad sign for Microsoft. It has a strong presence in the PC world but lacks influence in the mobile world. However, there’s a seemingly crazy but simple solution for that.

Microsoft should relaunch the Windows Phone.

The challenge would be immense, especially since competing with Google and Apple at this stage may seem daunting. However, in recent years, significant changes have occurred in both hardware and software.

Image: Neowin

When it comes to hardware, it’s worth noting that Microsoft doesn’t manufacture its own mobile chips. While it has AI chips, it’s relying on manufacturers like Qualcomm in the short and medium term. This isn't a major issue, given that most manufacturers, including Samsung, also do the same.

On the software front, things get even more interesting. The launch of the Copilot+ PCs has demonstrated that Microsoft’s Windows 11 is fully ARM-ready. These PCs don’t even mention “Windows 11 ARM.” The operating system is the same, whether the version is x86 or ARM. This suggests that it’s feasible to bring Windows 11 ARM to mobile.

The second aspect to consider is its native apps. Again, it’s reasonable to assume that Microsoft could optimize Edge, Bing Maps, Outlook, and Office 365 for mobile screens.

The third factor, which is the most challenging, involves third-party apps. It’s unlikely that millions of developers will start creating apps for a new platform. However, this might not be necessary at all: Windows 11 is compatible with Android apps.

Other options exist, such as promoting Progressive Web Apps (PWA). While the performance, quality, and smoothness of the experience may not be as good as native apps, at least the option would be there.

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A Microsoft Phone With Microsoft AI

The effort required for Microsoft to relaunch the Windows Phone would undoubtedly be significant. However, the idea isn’t new. In fact, it’s been suggested before and has created expectations in the past. Concept videos and images created by designers in recent years are evidence of this. You can see one example below:

If Microsoft were to relaunch the Windows Phone, it would have another opportunity to compete in the mobile phone market. While it’s impossible to predict if the execution would be strong enough to compete, it’s clear that the Windows Phone could provide the company with a strong platform for future competition.

Suddenly, it could enhance both its current and future ecosystems. This is where artificial intelligence would come in, likely taking over our phones in the absence of smart glasses. The operating system would no longer be Google’s on Android or Apple’s on iOS, but rather Microsoft’s on the Windows Phone.

It’s important to note that the company has previously attempted to re-enter the mobile phone market with the Surface Duo, a device with a dual-folding screen based on Android, which turned out to be a colossal failure. If Microsoft were to approach this again, it would need to be a very different strategy. Plus, its own operating system (a Windows Phone based on Windows 11 ARM) would need to lead the way.

Considering how much Microsoft is investing in this area, it doesn’t seem very appealing to risk depending on its rivals. As such, the idea of relaunching the Windows Phone seems quite crazy.

Or does it?

Image | Cade Lin

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Microsoft is once again trying to attract Windows developers so that they'll transform their apps with AI. However, it faces a challenge as difficult as the one it failed at a decade ago, when it unsuccessfully tried to convince them to transfer their apps to the Windows Phone.

Without a strong app ecosystem, Microsoft’s dream to lead the AI revolution on PCs could vanish. This is what happened with phones, although native apps aren’t as crucial on PCs as they are on mobile.

Why this matters. Microsoft still needs widespread adoption of its AI tools for Windows by developers if it wants to solidify its position and differentiate itself from Apple and macOS.

Without apps that make the most out of the AI capabilities of the new Copilot+ PCs, the value of Windows will decrease, and users will have less reason to purchase these laptops.

Déjà vu. In the past decade, Microsoft attempted to attract developers with the Universal Windows Platform (UWP) for smartphone, computer, and Xbox apps. However, this attempt was a failure.

The Windows Phone faced challenges due to the absence of key apps available on iOS and Android. Additionally, the apps that were available on Windows Phone were often of lower quality. As a result, Nokia’s Windows Phone didn’t attract enough users. And without a strong user base, developers didn’t find creating apps for the platform worthwhile.

• In 2017, Microsoft discontinued its smartphone efforts and acknowledged the loss of billions of dollars from the venture. Despite the investment, the Windows Phone never achieved more than a 3% global market share.

Microsoft attempts to woo developers with AI. Microsoft is providing developers with a set of AI tools to enhance their Windows apps without having to start from scratch. These tools include OCR (Optical Character Recognition), automatic translation, voice transcription, visual effects, and Windows’ new Recall feature, along with the ability to utilize the new NPU to speed up AI processing.

Although it’s still early, only a few third-party developers have demonstrated apps that have been enhanced by these new features. According to The Verge, only a handful of demonstrations have showcased Copilot+ PCs’ NPU use for AI tasks, such as in Djay and DaVinci Resolve. As of now, there are no major concrete plans.

The challenge. To achieve success, Windows AI needs to be widely adopted by developers as quickly as possible. If Microsoft faces slow adoption as it did with UWP, developers may not find it worth the effort to adapt their apps.

Despite the failure of Windows Phone, Microsoft has yet to demonstrate its ability to create a thriving ecosystem around new technology.

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Microsoft is known for its desktop operating systems, office suite, and cloud services in partnership with OpenAI. However, building a successful app ecosystem is a different challenge.

While the current tools may present a more manageable challenge than the Windows Phone, Microsoft can’t afford another failure after the demise of its mobile venture. With Satya Nadella now leading the company, the stakes are high.

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