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Nokia in kitty, Microsoft can now take on Google, Apple

The integration will allow Microsoft to optimise Windows Phone for the hardware that Nokia brings to the market. If their existing tie-up means the best Windows Phone experience on Nokia, it will get better in the future.

Nandagopal Rajan        Last Updated: September 3, 2013  | 19:43 IST
Nokia in kitty, Microsoft can now take on Google, Apple
PHOTO: Reuters

Nandagopal Rajan
The Windows Phone has essentially been a Nokia Lumia device for some time now. And in the coming months, chances are, it will be only a Lumia phone. Samsung and HTC have been losing interest in Windows Phone - thanks to Nokia's 80 per cent plus grip on the operating system. They will most likely pull the plugs on the OS now that Microsoft has become the hardware vendor.

For average users, this means Nokia will, like Apple, become a smartphone maker that also brings with it its own operating system and services. Their rival Android, which has the largest market share among smartphones, is now split between multiple manufacturers and hundreds of devices. Samsung is the dominant player on both counts.

This integration will allow Microsoft to optimise Windows Phone for the hardware that Nokia brings to the market. If their existing tie-up means the best Windows Phone experience on Nokia, it will get better in the future.

Manasi Yadav, IDC's senior market analyst for mobile phones and tablets says the acquisition clearly indicates that Microsoft wants to gain stronghold as a devices and services company and bank upon the Nokia legacy and brand equity in the phone market.

However, she is skeptical if all this is indeed good news. "Microsoft in the past has not been that strong in hardware. We are not sure how 'hands on' it will be with Nokia. This improved agility in hardware may not translate if its mobility strategy and integration with other Microsoft assets still goes slowly," she added.

While there are already rumours about a Windows RT tablet and a phablet from Nokia, Microsoft's strategic rationale released today says 'success in phones is important for success in tablets; and success in tablets will help PCs'. This would mean Nokia will produce everything short of PCs, cementing Microsoft's place as a hardware maker.

According to research firm Canalys' data for Q2 2013, Microsoft Windows Phone has a 3 per cent market share globally with 7.8 million units. Since Q4 2011, Nokia has sold 28.1 million Lumia devices globally and currently accounts for over 80 per cent of all Windows Phone devices sold worldwide.

Globally, Windows Phones are already number three behind Android and iOS. The OS is only expected to strengthen this position by 2017 when it is projected to command 12.7 per cent of the market, up from the present 2.7 per cent. That will be significant, for four years from now over a billion smartphone will be sold, much more than the number of feature phones.



Though insignificant in comparison to Android's 75 per cent plus market share, Windows Phone is finding good acceptance in many markets, partly due to the budget friendly offerings like Lumia 520. Figures from Canalys show that the OS was second only to Android in India in Q2 2013 with a market share of 4.5 per cent - in contrast Android was an imposing 89.9 per cent. In some markets, Windows Phone is close to 10 per cent in market share this quarter.



All these numbers suggest the smartphone battles of the future will be fought by the three tech giants - Google, Apple and Microsoft. While Google's battles are now being fought by Samsung, the former has already made it clear that it will be entering the hardware race for good through Motorola. 

Many like Dippak Khurana, CEO and Co-Founder of Vserv.mobi think this will give Microsoft the opportunity to compete with Google head on. "While both companies will benefit immensely from the synergies brought together, this deal will also turbocharge the overall growth of the industry as it will bring new opportunities for all stakeholders," he said in a release.

Microsoft's ownership of Nokia means the potential to create a worthy challenger for the dominance of Android and iOS. But that will mean innovation, synergy and some old fashioned slogging.

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