Microsoft recently acquired some of Nokia’s service businesses and devices and is also in the process accessing some of the company’s patents. This comes after the company’s recently increased efforts to increase its share in the smartphone market The cost of this transaction is estimated to be about 5.44 billion euros. Microsoft hopes that the multibillion dollar deal will significantly reinforce its mobile device strategy. This strategy will support or enable the next generation of smart phone users to infiltrate the Windows ecosystem through the Nokia smart phones.
An analysis of the power point presentation by Microsoft on its acquisition of Nokia reveals that it is something that the company has been planning for quite some time. Its strategic rationale includes; acceleration of phone share, strengthening of overall opportunity, smart acquisition and finally a strong execution plan. The strategy adopted is very viable and its implementation will highly beneficial.
This strategy implementation will see Microsoft gain an enormous talent pool that has been a dominant force in the Windows ecosystem with equipment of unmatched quality. One specific point in the strategy implementation where Microsoft will most certainly make a huge score is the patent arrangement. Microsoft seeks to gain over 8500 patents from the deal. These include the ownership of the Asha and the Lumia brands as well as a 10-year license to utilize the Nokia brand on potential “feature phones”.
It is no doubt that Windows has chosen the right tool to implement its mobile device strategy. Nokia is a renowned mobile device manufacturer and recently it has been producing smart phones around the operating system of Microsoft Windows in a bid to advance its market share. By acquiring the Nokia’s design team as well as its assembly and manufacturing facilities, Microsoft will be able to build uncompromising quality devices that will definitely leave a huge footprint in the smart phone market.
This strategy implementation that involves the combination of MS ambitions and Nokia’s financial profile, brand, technology, distribution network and experience in new and emerging markets has an unwavering potential to not only improve the market position of the Windows phone and Nokia but to also drive the adoption of smart phones in the emerging markets faster.
It is however important to mention that this strategic implementation will be not devoid of problems or challenges. Beyond the huge economic opportunities that the acquisition of Nokia brings, there is a weak point that is yet to be dealt with in an effective way and this is the future of the Windows Phone. Given its current low scale status, there is a huge likelihood that new investors will be inclined to pump resources into app development of new acquired Nokia devices and the Windows phone may start plunging down the smart phone market share.
One potential future strategy with massive benefits that Microsoft should think of adopting is to alter its development efforts of its products on the Android and the iOS platforms. Before doing this, Microsoft should first engage in a comprehensive development of controlled software and hardware that will be fully compatible with the two platforms.
Apart from Nokia, Microsoft should also extend its services to other groups of mobile devices produces like Samsung while allowing the Nokia phones to serve a ladder or on-ramp to the new Windows Phone. This strategy will Microsoft and advantage over one of its fiercest competitors, that is Apple. Apple is renowned for its complete refusal to license its smart phone operating system to be used by other phone producing companies.
This strategy amongst other will not only help Microsoft to strengthen its current share in the smart phone market but will also help the company to grow not only in terms of public appeal but also in terms of revenue generation.
References
Maxwell R, 2013, Microsoft’s strategic thinking in its acquisition of Nokia Devices & Services, viewed November 6, 2013, http://www.phonearena.com/news/Microsofts-strategic-thinking-in-its-acquisition-of-Nokia-Devices---Services_id46995
Nokia’s acquisition Implications for smartphone trends in emerging markets (II) | Manufacturing Today. (n.d.), viewed November 6, 2013, <http://www.manufacturingtoday.com.ng/2013/10/08/nokias-acquisition-implications-for-smartphone-trends-in-emerging-markets-ii/>
What’s the strategic rational in acquiring Nokia? Here’s Microsoft’s answer | Windows Phone Central, viewed November 6, 2013, < http://www.wpcentral.com/strategic-rational-acquiring-nokia-microsofts-answer>
Alfreds D, 2013, Microsoft strategy to buy Nokia will pay off, says analyst | News24, viewed November 6, 2013, < http://www.news24.com/Technology/News/Microsoft-strategy-to-buy-Nokia-wil-pay-off-says-analyst-20130903>
