At present, Nokia devices, which will be acquired by Microsoft in a $7.2 billion deal, is the only fully committed phone vendor for Windows OS. Will Microsoft offer Windows OS for free to rival Google and Apple?
One of the main objectives of the Microsoft-Nokia deal is to expand its OS to other OEMs. The Nokia acquisition at this price will enable Microsoft to compete with Apple and Samsung and enter emerging telecom markets with new devices. ( What Microsoft gets besides Nokia phone biz )
In the first quarter of 2013, Microsoft Windows Phone replaced BlackBerry as the third largest OS with 3.2 percent market share.
Windows Phone’s OS market share increased 133.33 percent to 3.2 percent from 2 percent, while BlackBerry OS market share decreased to 2.9 percent from 6.4 percent.
Nokia is accounting for 79 percent of Windows Phone shipments during the quarter, IDC said recently. ( Microsoft Windows Phone replaces BlackBerry as third largest OS, Apple iOS market share dips to 17.3% )
Nokia has shipped 20.3 million units of Windows Phone devices. “No phone maker except Nokia has been fully committed to Windows Phone platform in the past 12 months. Maybe it’s time for Microsoft to abandon its Windows licensing model in mobile,” said Analysys Mason Principal Analyst Ronan de Renesse.
In the first quarter, Apple iOS market share decreased to 17.3 percent from 23 percent. Android’s OS market share increased to 75 percent from 59.6 percent. Android is growing thanks to the rapidly growing support from phone developers.
Analysts response to Microsoft-Nokia deal
The Microsoft-Nokia deal received different opinion from telecom industry analysts.
Frost & Sullivan
Benoy CS, director, ICT Practice, Frost & Sullivan, said that the deal is a strategic move by Microsoft and it is perfectly in line with their overall vision. For actively pushing its Windows OS for mobile phones, it will be important to have a strong mobile devices business.
The mobile ecosystem is evolving very fast and Microsoft has placed big bets on its Windows 8 OS.
The response from other mobile device companies for Windows 8 based mobile phones was not very encouraging. Hence, it will be critical for Microsoft to have a strong device company at their side to implement their strategy.
Frost & Sullivan says with a couple of new and good product launches similar to Lumia, Microsoft should be able to create the much needed momentum in Windows mobile ecosystem. Moreover, we just started witnessing the gradual transition from feature phones to smart phones in countries like India.
With Nokia, Microsoft can effectively leverage to penetrate into the high volume entry level segment in India.
Analysys Mason Principal Analyst Ronan de Renesse, said the Nokia acquisition is a logical step forward for Microsoft but will not change the company’s position in mobile overnight.
The acquisition will have a limited impact on the smartphone market in short/medium term. Nokia and Microsoft have been working hand-in-hand for 2.5 years on the Lumia device range and we don’t expect the acquisition to fundamentally change the Lumia team and its product roadmap for the next 12 months.
The opportunity for Microsoft is in the non-smartphone space. Microsoft will gain a foothold in developing market via Nokia’s non-Lumia device portfolio; 45.5 percent of Nokia mobile device shipments went to Greater China, Middle East & Africa and Latin America in 2012. This strengthens Microsoft’s position versus Google in connecting the next billion people.
Analysys Mason says Microsoft must make a decision on the business model to adopt in mobile. The handset market is extremely competitive making it particularly hard to sustain high margins and make a profit. Microsoft has the ability to undercut its competitors and use mobile as a loss leader to gain global reach for its services and software ecosystem.