It’s the final countdown

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Once the world’s biggest handset manufacturer, Nokia will now be a Microsoft satellite following its purchase by the IT giant

Microsoft’s acquisition of Nokia’s devices and services business will give it the ability to overtake Apple and Samsung and lead the mobile market, the technology company has said.

Executive VP of operating systems Terry Myerson said the £4.6 billion deal, announced last week but expected to conclude in the first quarter of 2014, will unlock Microsoft’s potential to “win” in the mobile device space.

The acquisition means Nokia’s 32,000 employees in its mobile phones and smart devices units will join Microsoft, although the Washington-based company said research and development will continue to be based in Finland. The transaction also gives Microsoft a 10-year non-exclusive licence for Nokia’s patents.

Myerson said the partnership will mean the two companies will have the capacity to overtake Apple and Samsung, but that Microsoft will need to invest a lot more in marketing mobile devices.

He said: “Together, Nokia and Microsoft have the scale to compete with Galaxy, the design capabilities to compete with [Apple’s] iPhone and the innovation to lead us all.

“We need to make the market for Windows Phone. We have to go to the customer with a clear message. The marketing approaches we have used in the past were insufficient. But together we will have a united voice.”

Nokia ‘lacks resources’

Myerson’s comments came a few hours after Nokia chairman Risto Siilasmaa admitted Nokia does not have the spending power necessary to grow its smartphone market share.

He said: “The industry has become a duopoly, with the leaders creating significant financial momentum at a scale not seen before. Even though people who try a Lumia quickly fall in love with the device, it does require a significant investment to get people to try a new experience.

“With all these dynamics it is evident that Nokia alone does not have the resources for the required acceleration across mobile phones and smart devices, especially as we have great opportunities in other areas. Microsoft does have the resources.”

Microsoft’s mobile phone operating system, Windows Phone, currently has the third largest market share in the world, according to analysis firm IDC, behind Google’s Android and Apple’s iOS.

According to the firm, in the first quarter of 2013, Windows Phone devices made up 3.2 per cent of all mobile sales, with seven million units being shipped. Android leads with 75 per cent of the market while Apple is second with 17.3 per cent.

Impact

The acquisition required Nokia’s former CEO Steven Elop to step down because of a conflict of interest created by his former position as president of Microsoft. Elop will now take on the role of Nokia executive vice president of devices and services.

He said the acquisition will also benefit operators and distributors, as the two companies’ marketing activities will be better aligned.

“The deal helps Windows Phone and our devices increase share through faster innovation, better products and unified branding,” he said.

“For operators and business partners our sales efforts will get better and increase awareness of our brand through a more aligned approach.”

Full article in Mobile News issue 546 (September 9, 2013).

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