The world sat up and took notice when Microsoft (MS) announced that it would buy Nokia’s mobile-making unit for $7.2 billion. Will it pay the dividends that MS thinks it will? Will it result in an Apple-like turnaround for the software giant?
Let us be clear that the deal was somewhat inevitable. Nokia has, over the past few years, lost the advantage it had initially gained in almost all markets of the world. While in the developed countries Apple and Samsung have cornered the smartphone market, local firms have managed to edge out the Finnish phone-maker in several developing countries, much like what Micromax has achieved in India.
Microsoft, on the other hand, is just emerging from a $900-million write-down on the débâcle that was the Surface RT tablet — a move that reportedly led to CEO Steve Ballmer’s resignation, and even the latest version of its flagship Windows Operating System (OS) has come in for flak because of the radical changes it has tried to introduce. The firm’s PC business has been suffering for quite some time now, and the MS Office productivity suite has only recently adapted itself to cloud computing.
Therefore, it was inevitable that MS would look to revitalise its revenue stream, even if it meant redirecting it through a newly-acquired, profitable venture. Also, the collaboration is expected to help MS, with its own software and Nokia’s devices, take on Apple and its proprietary iOS as well as Samsung and other device manufacturers who run Google’s Android OS.
And now, back to the question: Will it work? The answer is, probably not. Unless Microsoft starts doing something really right, like pricing the phones to suite the customers’ needs and pockets better. The reason Nokia lost India’s market is that it ignored several local competitors and the extras their phones offered, like dual-SIM capability and lower prices. If Microsoft can find a way to address these and similar issues, it may be able to find its way into not only the Indian market but in many Asian and African markets as well. That is where MS can start building. The other things will come later.
Microsoft must also get back to the drawing board and strategy rooms to find a way to get back the customers Nokia has lost, especially in the smartphone segment. It has to develop new features and quality apps, while simultaneously keeping the price a little lower than the competition, especially in the non-US and non-European markets, because elsewhere, substance matters more than fandom.
If it slips up in any of these fields, Microsoft will be one step closer to writing its obituary in the devices field. And then, it will only be a matter of time before another software giant emerges with a replacement for Windows, much like how Google has driven the Internet Explorer to near-extinction with its Chrome browser.
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(Contributed by Suhas S)