Microsoft is making the right decision if it truly gets out of the Lumia business (MSFT)

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Microsoft has announced that is selling its entry-level phone business to FIH Mobile and HMD global Oy for $350 million as the tech giant continues to distance itself from mobile hardware.

The move was not a surprise given how Microsoft has been reducing its feature phone business since CEO Satya Nadella took over. But what is noteworthy is that the press release indicated that Microsoft might never release another Lumia phone ever again, reports The Verge.

"Microsoft will continue to develop Windows 10 Mobile and support Lumia phones such as the Lumia 650, Lumia 950 and Lumia 950 XL, and phones from OEM partners like Acer, Alcatel, HP, Trinity and VAIO," reads the section in question. Nowhere does the press release mention the development of any new Lumia devices or any future hardware.

Furthermore, the announcement came just after the leak of an internal memo that reiterated Microsoft's commitment to mobile software, which also did not mention Lumia devices.

The likely course of action for Microsoft is to build a Surface phone that targets the company's business customers, with a focus on device security and privacy. The company has a less-than-stellar track record with consumer mobile devices.

Sales of Lumia phones, the company's flagship smartphone device, have been trending downward since the fourth quarter of 2014. In the latest quarter, the company sold 2.3 million Lumia devices, a 73% year-over-year plummet from the 8.6 million it sold in Q1 2015.

But Microsoft knows the enterprise business extremely well, so it would make sense to play to its strengths and tap into its enterprise base to climb back into a prominent spot in the mobile market.

Keep in mind, however, that BlackBerry, which bet on security and productivity features, has struggled to get its enterprise clients to convert to its platform. So Microsoft's road will not be an easy one.

Moreover, the global smartphone market is expected to slow considerably over the next few years. Despite a record-setting holiday quarter, 2015 was likely the last year of double-digit growth for smartphone shipments.

Mature markets were at the heart of this year’s deceleration. Adoption has reached new highs in key markets in the United States, Europe, and China. The pool of first-time buyers in these countries is shrinking rapidly, and sales are now primarily coming from phone upgrades.

Meanwhile, emerging markets will continue to see robust shipment growth. India and Indonesia, in particular, will help fuel a large share of the shipments growth within the global smartphone market over the next few years.

Will McKitterick, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smartphones by country that forecasts the market through 2021 to reflect slower, stabilizing growth in the long term.

BII

Here are some key points from the report:

• The global smartphone market is still growing at a steady pace due to more widespread adoption in emerging markets. We estimate the global market will hit about 2.1 billion units shipped in 2021.
• Shipments growth over the past few years has been driven by the falling price of smartphones, which has made handsets more accessible in emerging markets. The average selling price of a smartphone in India nearly halved between 2010 and 2015.
• With relatively low smartphone penetration, we forecast Indian smartphone shipments to grow rapidly over the next five years. Nevertheless, India has a long way to go before it surpasses China as the world’s leading market for smart handsets. India is estimated to account for roughly 10% of the global smartphone market in 2016, considerably less than China’s 30% share.
• The global platform wars are over, even as smartphone adoption continues to rise across various markets worldwide. Android and iOS are estimated to account for 97.3% of global platform market share in 2015, compared to 96.3% last year.
• Apple closed the year with another strong quarter on the back of its iPhone 6s and iPhone 6s Plus launches. Still, the vendor saw a slight decline in YoY growth of its share of the market in the face of stiff competition from Samsung and Chinese vendors such as Huawei.

In full, the report:

• Forecasts global smartphone shipments through 2021.
• Explores why India is the next high-growth smartphone market.
• Breaks down the global smartphone platform wars.
• Discusses smartphone vendor performance market share.

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