Wednesday 25 April 2018

Adrian Weckler: Five consequences of the Microsoft Nokia deal

Stephen Elop, CEO of Nokia, left, with CEO of Microsoft Steve Ballmer (AP)
Stephen Elop, CEO of Nokia, left, with CEO of Microsoft Steve Ballmer (AP)

Microsoft has agreed to purchase the handset division of Nokia for €5.4bn.

It is a momentous day in the history of the smartphone industry: the Finnish manufacturer was the world’s standardbearer for mobile phones and, for a short time, the pride of European manufactuing. Here are five consequences of the deal.

1. It all but confirms a Nokia tablet

This was set to happen anyway, but there is no doubt now that we will be seeing Nokia tablet PCs in our shops in months to come. Microsoft’s existing tablets -- the Surface RT and Surface Pro -- have struggled to gain traction in the market. This will add impetus to the tablet division and could even spark a rethink of how to design them.

2. It will have little impact on smartphones in shops this year

The Christmas phone market is already done and dusted for this year: don’t expect any snazzy new initiatives from either Nokia or Microsoft in Irish shops. In Ireland, Microsoft has between 5pc and 10pc of the market, which is higher than its global market share and a testament to Nokia’s historic brand strength here.

3. Microsoft needs to improve more than Nokia

Although its operating system failed the smartphone test years ago, Nokia still makes first class engineering and handsets. It is arguably Microsoft that needs to keep improving the software as a matter of urgency. Windows Phone 8 works fine and is perfectly usable. But it still lacks the trust and acceptance of the public in the Apple and Android phones have garnered.

4. While not yet a last throw of the dice for Microsoft, things are starting to get urgent

Right now, Apple’s iPhone and Gogole’s Android (via Samsung, HTC, Sony and others) utterly dominate the smartphone world. By contrast, Microsoft -- mostly through Nokia -- has less than 5pc of the world’s market share. To have a realistic shot at survival at the scale it currently employs, it needs at least 10pc. And that needs to happen in the next three years, at the very outset.

5. It’s a sad day for European manufacturing pride

Just five years ago, Europe ruled the world in the mobile phone industry. Now it is becoming just another market for innovators from the US and Asia to sell their devices. How did it come to this? Where are the German, French and Scandinavian innovators?


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