Microsoft spurs trade with Nokia takeover…

Microsoft spurs trade with Nokia takeover…

Operators and retailers have hailed Microsoft’s £4.6bn takeover of Nokia as potentially the beginning of a new era for the industry this week. They hope the acquisition of the Finnish manufacturer will lead to a powerful new ‘third force’ in the mobile market, challenging the global dominance of Google and Apple in software, and Apple and Samsung in smartphones.

But there are also fears – particularly among manufacturers – that change will not stop there. If Microsoft’s acquisition proves effective, consolidation could become unstoppable and lead to an even further concentration of commercial power.

Carphone Warehouse, Britain’s biggest mobile retailer, welcomed the news. CEO Andrew Harrison commented: ‘I think it consolidates what had been a growing position for the windows platform and gives added firepower to play out the next chapter of our industry between such global forces as Apple, Google and now Microsoft. Retail is of course critical to show the comparisons so it is good news for us.’

Scott Hooton, COO at Phones 4u, was also upbeat: ‘Microsoft could be a third power in the market, having the choice of a third operating system is very important. The unified marketing messages will also be good.’ 

Operators gave their views off the record. One major player told Mobile: ‘This is good news for operators. There’s now a chance that the smartphone market will become a three-horse race again after the demise of BlackBerry.’

Other operators told Mobile they were anxious to see Nokia succeed to challenge Samsung and Apple: ‘Operators want Nokia, whatever guise it’s in, to be successful. Having another platform like Windows Phone doing well will also be useful.’

One manufacturer told Mobile: ‘Operators are pleased because they are hoping it breaks the duopoly of Samsung and Apple – so long as Microsoft can get its act together to become a real alternative to Google.’

But hopes hinge on Microsoft quickly showing its muscle as it bids to improve on Windows Phone’s distant third place in the battle of operating systems. The deal will mean that it gets far more direct payback from investment in R&D, but the jury is out on whether Microsoft or Nokia can market its products successfully enough to achieve mass adoption.

Last month EE CEO Olaf Swantee called for better marketing and publicly criticised Microsoft for not giving enough support for Windows Phone.


...But some fear consolidation will go too far

Several insiders and business experts expressed concern about the long-term competitive threats from Microsoft’s proposed takeover of Nokia.

Telecoms analyst John Strand called it the ‘beginning of a new age when IT and internet companies define the hardware and services of the mobile device ecosystem’.

A manufacturer source told Mobile: ‘There’s Apple with the iPhone, Google with Motorola and now Microsoft owning Nokia. That’s 85% of the world’s smartphone market dominated by the internet market. This commoditisation is not good news for operators or manufacturers like Samsung.’

Major operators concluded much the same. One told Mobile: ‘All the major power is centred in the west coast of the USA. Forget China. It is a reminder of how the US’s stronghold is quickly developing from both a software and a hardware perspective.

‘The role of the pure play handset manufacturer is under threat. If you make handsets and software you have a better chance of maintaining differentiation. That is bad news for Samsung as they don’t really have that software play.’

A veteran telecoms insider told Mobile ‘the world is smaller for this deal’, and although there were short term advantages for operators, they would have to ‘diversify’ to keep up.

Warwick Business School academic Ronald Klingebiel added: ‘Handset markets are commoditising. The action is in software, apps, and soon these will be delivered  via the cloud. Nokia is right to divest of its phone business. BlackBerry should do the same.’



Authors: Carol Millett and Matthew Campelli

Written by Mobile Today
Mobile Today


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