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Microsoft, Nokia: An ugly affair

Posted by VASUDEVA REDDY on Monday, February 24, 2014 Under: economic articles

Nokia had finally unveiled a Handset which is loaded with ‘the most popular’ OS on earth, Android. The move seems to be strange one when you consider the fact that Nokia has been sold to Microsoft and that deal will be completed by this quarter end. Android may be the most popular OS, but, WHY NOW? To understand it completely, I need to dig into history a bit, bear with me.

PC sales have been declining for the last few quarters; if Microsoft sticks with its desktop business alone, it will be fade out soon. They had left with no choice but to move to smartphone/tablet arena. It is always better to be late than never. Microsoft is no new to smartphone world, MS released its first smartphone in the year 2000, and they never deployed much of its resources in mobile operating system as they were enjoying the huge profits from Windows XP and Office suite. They felt the heat when PC market was saturated and there seemed to be no growth. They started distributing the eggs to different baskets, such as Windowsphone, Windows RT, XBOX and not to leave alone PC.

Smartphone is the next big thing (may be late?) and they had to jump into cruising ship, they completely revamped their windows mobile and launched Windowsphone in the year 2010. By that time, Nokia was surrounded by the losses in their Devices division as they didn’t keep up with the change, and that change was Android.  They didn’t adopt Android at the right time, by the time they considered it, it was over crowded.


Microsoft had money, they wanted to be a significant player in Smartphone business AND Nokia was vulnerable. MS stroke a deal with Nokia, a billion a year for teaming up with them for the coming four years. That was huge money for Nokia, and it was sweet thing for MS to get Nokia aboard. Three years have been passed since then, Windowsphone may not be a significant player in the market, but yes, it is a noticeable player, a niche player. A distant third player. Nokia, literally, owned windowsphone market with over 90% share. Brand Lumia had become more popular than Windowsphone itself, Nokia could able to ship 25 million Lumias in 2013. Microsoft didn’t want to be another Google with Samsung; they wanted to control ‘their’ OS. Again, MS had money and Nokia was still in loses. MS gave an offer that Nokia can’t refuse, they bought a ‘loss making’ division for $7.2 billion.


Finally, here we are! Nokia’s handset and devices division will be taken over by Microsoft in a month or so. Back to the original question, what made them to release an Android phone, after Nokia is being taken over by Microsoft?

One, even after three years of its launch, Windowsphone failed to create any ripples in the market. Two, Nokia is selling their Hardware (handsets and devices) division to MS and they will be left with their HERE (mapping) technologies and Nokia networks, technically it will be a software firm. Nokia wants their HERE maps to reach possible no of people. The strategy Nokia and MS adopted was to hit their common competitor (GOOGLE) right at the spot. Nokia X, X+ and XL are forked Android OS, that means it will have access to Playstore and it Nokia removed all the Google services from the phone.


Point is, People are crazy about android phones at entry levels, what if it comes with Nokia brand on it, will be selling like hot-cakes. Yes, the hot-cakes filled with Nokia’s and Microsoft’s services. Another thing is, X, X+ and XL are heavily inspired (copied?) from windowsphone, to give a windowsphone feel to android users, so that their next phone will be a Lumia. Heard of Surrogate marketing? That is exactly Microsoft and Nokia adopted here, promoting Windowsphone and their services via a competitor’s product. This might be a very strange marketing strategy, only time can answer its productiveness. 

In : economic articles 


Tags: nokia  microsoft  windowsphone  windows  android  samsung  here  maps  pc  google  samsung  x  x+  xl  merger  taken  over  operating system  smartphone 

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