While the move to buy Nokia gives Microsoft’s Windows 8 strategy a much-needed boost, it has worried rival Windows device makers.
Steve Ballmer, CEO of Microsoft, had in July announced the “One Microsoft” strategy to focus on devices and services, and analysts believe this move will help the company achieve that vision. The strategy is simple: Focus on operating system, cloud computing initiatives, devices and apps. Areas where it is fast losing out to competitors like Apple and Google.
According to industry watchers, in the last few years, the way people use technology has changed dramatically. “Consumers want to adopt more mobile phone technology without having to pay for licences in the traditional way and Microsoft seems to have understood that,” said Anshul Gupta, Prinicipal Research Analyst at Gartner.
But in an e-mail to employees and partners, Ballmer said the deal is a win-win for employees, shareholders and consumers of both companies. “Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services,” he added.
Microsoft has been selling 20-30 million phones, according to research estimates all over the world, far lower than the 250 million iPhones sold or the 900 million Android phones in the market. “It is a vicious cycle. Consumers do not buy Windows phones as there are no compelling apps and software developers will not use Windows to code as there are not enough users,” said a start-up company that recently switched to developing apps for Android.
The silver lining, according to analysts, is that Nokia contributes to 70 per cent of Windows Phone sales and add to that its 91 per cent market share of the operating systems, and Microsoft is still a contender.
However, by entering into devices, Microsoft locks horns with some of its partners with whom has been bundling software in the PC era for more than three decades.
For example, according to reports, Acer has decided not to launch Windows Phone 8 device this year.
“At the end of the day, Microsoft needed to correct its weak position in the smartphone segment,” said Holger Mueller, Principal Analyst & VP, Constellation Research.