Microsoft Nokia deal: A planned alliance or a desperate move?
Microsoft Nokia deal: A planned alliance or a desperate move?
Everyone is well acquainted with the fact that Nokia has remained the world's largest vendor of mobile phones for years. It started losing its popularity and market share after the sales of Samsung started picking up in 2012. It has been on the back foot since the launch of Apple's iPhone in 2007. But now when Microsoft has bought Nokia Mobile Devices and Services, for $7.2 billion, the industry experts and the common people are trying to figure out the after effects of Microsoft Nokia deal. Do you think it as an alliance which can mutually benefit both the companies?
A planned alliance
• The deal will work as base to play a strong game in the mobile phone business and catch up with the other two players Apple Inc. and Google Inc.
• It can also be termed as an alliance done as per the demand of time. Microsoft made a deal at the perfect time when the share prices of Nokia were trading at its all time low.
• There was a risk to the Windows Phone 7 deal if any another company has stepped in to acquire Nokia.
• Microsoft needs the combination of software, services and hardware to stand at a good competitive position with Apple’s iOS and Google’s Android. Now with this deal Microsoft has offerings in every device category.
• Nokia has a very tiny market share in Smartphone. This deal brings the freedom for Nokia to sell off its Smartphone business than take on rivals like Apple on its own.
• Nokia also gets the much needed cash that can be utilized in the other parts of its business.
• The deal has resulted in an increased sale of Nokia units which was expected by the management.
A desperate move
• Microsoft and Nokia both are the laggards in the Smartphone industry and have failed to deliver results in the last few years. The fate of two weak companies with no forte in Smartphone industry makes the deal a desperate move.
• The deal with Nokia can have a negative impact on Microsoft mobile partner relationships with HTC, Samsung and LG.
• Former Nokia boss Stephen Elop is one of the aspiring candidates for the position of Microsoft CEO. His tenure at Nokia was on the whole uninspiring and Nokia's market share and market value have tumbled during this period.
• Alienating the phone partners can further deteriorate the condition of Microsoft in mobile-business industry. It is certainly going to bring new issues for the management.
• The changing leadership, the weak business model, new team, margin structure, growth potentials etc are the factors which brings uncertainty on the table.
Challenges are always there whenever a new deal comes into existence. That does not means that the deal is a desperate move. It can become a loss only if the Microsoft fails to capitalize on the opportunities in hand.
With faster innovation, increased synergies, and unified branding and marketing, Microsoft is in a better position to build a good base in the mobile business industry.
Discussion
- RE: Microsoft Nokia deal: A planned alliance or a desperate move? -Deepa Kaushik (04/15/14)
- The market situation of both Nokia and Microsoft especially after the launch of the iPhones and Android smartphones, indicates the deal to be the desperate requirement, showcased as an alliance. With the success in the mobile marketing of this joint venture will clarify if this deal could be suitably termed as an alliance or not.
Nokia had been ruling the market for mobile phones for ages, similar was with Microsoft with their software, until both received tough competition with the launch of Androids and Windows Phone 7. Both the partners evidently struggled to keep up their charm individually, which had led to the tie up.
Both these companies are undoubtedly good performers into the market and can definitely turn over their doomed image to the productive output in terms of better technology, stylish looks, competitive apps and user friendly features. Both the units if work on a single platform can yield better outputs and regain their market value which got depreciated much all through the way back.
Though it can’t be called a wholesome success, still we can visualize the positive move of this joint venture with the increased sale of the Nokia products into the market. Such a good feedback if continued with the untiring work of their joint expertise would definitely turn this alliance to a positive note.
