Microsoft CEO Satya Nadella Admits ‘We Don't Today Have Good Devices’ In Flagship Sector

Microsoft’s venture into the smartphone market has been a disaster. The Redmond, Washington-based company purchased Nokia’s Devices and Services Division last year, and earlier this month announced that it was taking a $7.6 billion write-down on the $7.2 billion purchase. The Nokia folly also resulted in Microsoft positing a $2.1 billion loss for fiscal Q4 2015.

So how does Microsoft plan on reversing its fortunes in the cutthroat smartphone market that is dominated by Android in market share and iOS in profits? For CEO Satya Nadella, Microsoft’s smartphone revamp will start at the top and trickle down. “We're going to have great flagship phones for Windows 10,” said Nadella during the company’s earnings call yesterday afternoon.

Microsoft at least appears to be on the right path with the rumored Lumia 940 and Lumia 940 XL, the latter of which will come with a 5.7-inch QHD display, Qualcomm Snapdragon 810 processor paired with 3GB of RAM, 32GB of internal storage, a microSD slot, and a 20MP PureView camera.

Microsoft CEO Satya Nadella

Microsoft’s (well, in actuality, Nokia’s) last flagship smartphone, the Lumia 930, was launched in July 2014. Even then, it wasn’t exactly flagship material and was quickly overshadowed by its Android and iOS competition. Nadella acknowledges his company’s lack of attention to the flagship sector, adding, “That's actually a segment we don't today have good devices, and we hope to change that with Windows 10.”

Nadella also plans to cleanup the mess it has created at the low-end of the smartphone sector. Over the past two years, Microsoft has flooded the market with numerous budget devices while it has neglected more premium offerings. “Value smartphones, that's the place where I want us to be much more efficient,” Nadella continues. “I think we want to be smart about how many of these phones do we want to generate, how many, which price points we want to participate. That's where you will see the most significant operational changes from how we operated last year to the coming year.”

Starting with the launch of Windows 10 Mobile this fall, Microsoft plans to focus its attention on three distinct segments of the smartphone market: value, business, and flagship. The company plans to release just a couple of smartphones in each segment which should help to alleviate some of the confusion, overlap, and lack of focus that has dominated Microsoft’s current crop of smartphones.