Let's look at the below charts, as we love charts here on the Chartz:

Worldwide Mobile Phone Sales to End Users by Vendor in 2014 (Thousands of Units)

Source: Gartner (March 2015) *Results for Lenovo include sales of mobile phones by Lenovo and Motorola.

Of course, M$ is only a few million behind Apple at this point.  So, M$ has securely planted itself into the low end of the market of mobile phones.  I think that M$ is taking the long term approach to this.  They know they need the scale and distribution model in place as they have done.

Now, when we look at the breakdown of the Smartphone market:

Worldwide Smartphone Sales to End Users by Operating System in 2014 (Thousands of Units)

Source: Gartner (March 2015)

It's clear that IOS and Android are killing it.  Apple took control of 90% of the profits made by all smartphones in the 4th quarter of 2014.  But, 35 million smartphone sales by M$ and its partners is not a bad thing.  With M$ releasing Windows 10 and Windows Phone 10 later this year, there will be even more reasons to get a Windows OS phone over the coming years.  Having a platform(Windows 10) that allows all of you content from your PC/Tablet/Game system/Smartphone to be derived from the same basic software will help immensly, and will inspire people to cross buy into the platform in different form factors.

As far as the smarphone numbers themselves, 2.8% sounds bad until you think about the actual amount of new users (35 million) that are now using their OS.  M$ need only get to 8 or 9% and they have an extremely large user base to feed off of.  As we all know, the money is really made off of the apps and content long term in the ecosystem.

Would love to see the numbers without Nokia's "dumb" phones.. Since Nokia was like the only one that still made them that market is shrinking fast compared to 2013

Isn't that 35 million over the course of 4-5 years or am I reading it wrong? Also, why are you typing MS like M$?

Also, a new OS doesn't really mean much if people don't care about the OS to begin with or any of its features

I guess you could say 35 million is great but compared to 1 billion, its nothing. And the Galaxy S4 by itself sold more than 40 million and thats just one phone

Windows phones are garbage. I am using one which I took out of curiosity. I have to admit OS is really good. But it has no apps. And no worthwhile browser for the mobile.

2.8% percent marketshare hardly sounds like "not losing"

That's good news

No, that's 35 million last year alone.  But, not just by M$ themselves.  THe 35 million represents all Windows OS phones sold last year.

Why did you type MS instead of Microsoft?  M$ = MS = Microsoft.  When Sony starts making money again, they will be $ony again.

As far as your point of the 35 mill vs a billion goes, I agree.  But, they have to start somewhere.  Also, now that M$ is releasing all of their products(office) to ios and android, they will stay relevent in mobile and business.  That will allow more time for their own mobile strategy to work.

Wow, that's quite a lot of old phones, dropping the market share from 9.9 to only 2.8 for WP.

Also, how is it that hey are not losing, when they seem to be one of the very few losing marketshare last year. And quite a steep drop. Also losing market share in OS.

Windows Phones are the worst buy if anyone is looking for smartphones, with barely any apps and a terrible UI. I had one for 6 months, and felt born again after moving to Android.
Hopefully they move away completely from Windows Phones (I know that it seems unlikely with their new strategy), but if they stick with it, they will continue to lose marketshare until they become completely irrelevant.

Anddddd it's dropping.

Well, heres the thing, Windows Phone has been dropping in Market Share YoY and while the phones are of course selling, its not selling as much as android in order to go up YoY so thats where the issue lies imo... I doubt it will ever gain significant market share cause as the phone sales increase, android and iOS will continue to see gains and will mostly lose/gain market share to each other where as every other OS will, while still selling phones, won't gain any market share. And sure, they have to start somewhere but it seems that they started higher and are going lower in terms of market share so I don't think its working.

Also, Microsoft having their apps on android/iOS makes their platform less relevant because there is no reason for anyone to buy a windows phone if they can have the same apps on android/iOS but they can't have the same android/iOS apps on windows phone