Microsoft officially delays its ambitious Windows 10 goal because its phone business collapsed

Microsoft CEO Satya NadellaREUTERS/Robert Galbraith

Right before Windows 10 first launched in July 2015, Microsoft announced an ambitious goal for the new operating system: getting it installed on 1 billion devices by the end of its 2018 fiscal year.

Now, almost exactly a year later, Microsoft is pushing that timeline out, saying it'll be at least a little longer before it hits that 1 billion mark. And in a statement, Microsoft puts the blame on the struggling Windows smartphone business.

Here's that statement, from a Microsoft spokesperson:

"Windows 10 is off to the hottest start in history with over 350M monthly active devices, with record customer satisfaction and engagement. We're pleased with our progress to date, but due to the focusing of our phone hardware business, it will take longer than FY18 for us to reach our goal of 1 billion monthly active devices. In the year ahead, we are excited about usage growth coming from commercial deployments and new devices — and increasing customer delight with Windows."

In other words, Microsoft is still pleased with Windows 10's growth on PCs and tablets, and still thinks of the 1 billion devices goal as strong and achievable. That's in no small part because of the free Windows 10 upgrade offer, due to expire on July 30, which got millions of people to try it at no cost.

But back in early July 2015, just weeks before Windows 10 came out for PCs and smartphones, Microsoft all but killed the Windows phone business, announcing huge layoffs and a new focus on building only a select few flagship phone models.

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The net result of those changes has been shrinking market share for the Windows phone, which currently hovers at around 3% globally, with little hope for recovered growth. And while Microsoft is expected to launch a new phone in 2017 that would make market leader Apple take notice, there won't be a new flagship Windows 10 phone from Microsoft in 2016.

So with phones dragging those numbers down, it'll be a while longer before Microsoft can hit a billion devices. That's important because developers like to go to the platforms with the most users, and Windows has been struggling to compete with iPhone and Android in that regard.

Microsoft is expected to announce earnings on July 19. Analysts are expecting earnings per share of $0.58 on $22.14 billion in revenue.

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