This may be the dark before the dawn for Windows Phone

Nearly four years after it launched as Windows Phone 7, Microsoft’s mobile platform remains a distant third both in the U.S. and worldwide. Canalys recently estimated that Windows Phone accounted for a mere three percent of all smartphones shipped in the first quarter of 2014, while Android and iOS combined to claim a dominant 97 percent of the market. Figures from IDC are only slightly rosier, pegging Windows Phone’s share of the market for all of 2014 at 3.5 percent. Even more troubling is news from Kantar Worldpanel Comtech that found Microsoft’s mobile OS has actually lost ground over the last year in the United States, China and Germany.

Predictably, that latest round of data has some respected analysts and tech reporters once again questioning the future of Windows Phone. Computerworld’s Preston Galla wondered whether anything can save the OS, while Tero Kuittenen took to Boy Genius Reports to explain why he thinks Windows Phone simply can’t rebound.

That skepticism is understandable, of course. Microsoft has failed to gain any substantial ground in mobile despite building a solid platform with a top-notch user interface. It has failed to effectively market its OS despite deep pockets, a high-profile brand and extensive partnerships around the world. And it increasingly seems intent on selling low-end and mid-range smartphones both in emerging markets in more mature territories despite competition that grows more cutthroat by the day.

Some continue to implore Microsoft to drop Windows Phone and fully commit to build an ecosystem based on Android. But while Microsoft and Nokia have the tools to execute that strategy even as Google clamps down on its OS (as I’ve written before), I don’t see how that gives them any real advantage in a market teeming with Android handsets. But there a few key reasons to believe Microsoft can continue to gradually make headway with Windows Phone:

  • Windows Phone continues to get better. Not only does Microsoft operate a quality mobile OS, it is making the right moves as the platform evolves. Windows Phone 9 isn’t likely to come to market for a least a year, disappointingly, but version 8.1 – which begins to ship in the next few days — has garnered positive reviews, not only for its updated user interface but also for Cortana, its Siri-like personal assistant.
  • It’s getting more attractive to manufacturers. Microsoft earlier this year made Windows Phone available free for phones and tablets with screens smaller than nine inches, eliminating a longtime barrier. That may attract the attention of some of the many builders of Android gadgets likely to be miffed by Google’s recent moves to retake control of its operating system by limiting usage of their own software and services.
  • The app gap is closing. The growth of Windows Phone has been shackled by Microsoft’s inability to build out its app library in its early days, but the platform’s modest worldwide presence is now big enough to call for the attention of most major developers. New apps still hit Android and iOS first, but the lag between that time and their debut on Windows Phone certainly appears to be lessening.

Microsoft clearly lost out on the opportunity for skyrocketing growth that would have quickly threatened Android and iOS, and the smartphone market is even more brutal than it was just a few years ago. But the venerable software company’s future in mobile is unquestionably tied to Windows Phone, and the OS now has the technological muscle to compete with the two dominant platforms. Windows Phone may never dominate, but Microsoft still has a chance to carve out a worldwide market share of eight to 10 percent in an industry that is crucial for the company’s long-term prospects.