Will an Android-powered Nokia Lumia line kill off Windows Phone?

The rumor mill says that Microsoft will release an Android-powered Nokia Lumia phone — a smartphone line that has been the flagship for Windows Phone. If true, will it mean the demise of Windows Phone?

The Web site @evleaks reports that Microsoft and Nokia will release a Lumia phone based on Android, but gave no details about release date or specs. The site has generally a good track record, so shouldn’t be ignored, even though there’s no way to confirm this latest rumor.

The move would not be as big a surprise at it first might appear. Microsoft and Nokia have committed themselves big-time to Android, primarily through Nokia’s initial X and more recent X2 line of budget-priced Android phones targeted at the developing world. The phones carry Microsoft services such as OneDrive, Skype, and Outlook.com rather than Google services on them, which is how Microsoft will make money on them. Their big-tiled interface also mimics Windows Phone. The hopes are that when users in the developing world move up the economic ladder, they’ll buy higher-price Windows Phone once they’re hooked on Microsoft services and used to a Windows Phone-like interface.

So far, though, Microsoft and Nokia has avoided committing to Nokia in the developed world, where the Lumia line is sold. The Lumia line is Nokia’s flagship, and typically are higher-priced phones.

But there’s a problem with Windows Phone and the Lumia line. It’s tanking. The latest figures from Kantar Worldpanel ComTech show that Windows Phone sales are sinking in the U.S. and China, and stalling in Europe, where it had met with some success. In the U.S. in May its market share was 3.8%, down from 4.7% a year previous. In China, its market share was a barely measurable 0.6% in May, compared to 3% a year ago. So Windows Phone is in trouble in the two largest smartphone markets in the world.

In Europe, things are only marginally brighter. In the five biggest European Union countries, its market share in May was at 8.1%, up from 7.1% a year ago. That’s now as good as it sounds, though. Back in November 2013, Windows Phone market share in those countries was 10%. So its market share in Europe appears to be on a downward trend.

Given all this, an Android-powered Lumia makes sense. Microsoft and Nokia would use the same strategy in the developed world as they are in the developing world: Stuff Windows services on the devices instead of Google ones. Microsoft would make money via its services.

But then what happens to Windows Phone? My guess is that even if Android-powered Lumias sell well, and Windows Phone continues to tank, Microsoft will still prop up Windows Phone. It would be too much of a public admission of failure to give up on Windows Phone entirely. And it’s possible that once people got used to the big-tiled interface of Android Lumia phones, they might eventually switch to Windows Phone. Possible, but not likely. Still, even if Microsoft and Nokia roll out Android Lumia phones, Windows Phone will likely be kept alive.