Microsoft debuts foldable smartphone for 2020 holiday season

Brief:

Microsoft introduced a dual-screen, foldable phone that runs on Google's Android operating system, a surprising return to the smartphone market after a 2017 exit. The Surface Duo will be available by the 2020 holiday season, and will have two 5.6-inch screens that unfold to 8.3 inches, per an announcement.
The Surface Duo will let users perform separate activities like watching Netflix on one screen while looking at email or chatting on the other. Microsoft also introduced Windows 10X to support other dual-screen devices like its Surface Neo tablet, also due for release next year, and products from hardware makers such as ASUS, Dell, HP and Lenovo, per a Microsoft blog post.
Microsoft also unveiled its voice-powered Surface Earbuds, wearable headphones that have a 24-hour battery life and will be available this holiday season for $249. The company introduced the new products while showcasing its latest line of Surface laptops.

Insight:

Microsoft's upcoming return to the smartphone market is notable for a few reasons, including its past failure to gain traction in the market with a Windows phone. Apple's iPhone, first introduced in 2007, had more advanced features including a touchscreen that didn't require a stylus, while Google's Android operating system spread rapidly because it was free for third-party handset makers to use and customize. Microsoft acquired Nokia's handset division in 2013 to get a stronger foothold in the smartphone market, but that proved to be a costly mistake when it wrote down the value of the deal by $7.6 billion and cut 7,800 jobs two years later.

Microsoft's strategy of marketing a dual-screen phone and developing an operating system that supports the devices may help the company to stand out in a maturing market for smartphones. By using two separate screens, Microsoft avoids some of the engineering problems that have plagued foldable-screen phones like Samsung's Galaxy Fold.

Meanwhile, smartphone shipments fell for the seventh straight quarter in Q2 2019, slipping by 2.3% to 333.2 million from a year earlier, per researcher International Data Corp. (IDC). Demand may pick up as wireless carriers roll out high-speed 5G service in many countries, leading to a broader upgrade cycle for smartphones. Global 5G phone sales are predicted to grow rapidly, exceeding 1 billion units by 2025, according to a new report by Strategy Analytics.

While the smartphone market struggles, the "hearables" sub-category of the wearables market is growing rapidly, which may help to drive demand for Microsoft's Surface Earbuds. Apple is the current market leader with its AirPods that made up 50% of hearables shipments in Q2, ahead of Samsung's Galaxy Buds at 10% and Xiaomi's Redmi Airdots at 6.5%, per IDC. The hearables market is getting more crowded, though. Amazon last month introduced its voice-powered Echo Buds for $129, less than the $159 price for Apple's AirPods.