Buying Nokia does not help Microsoft become more like Apple

“So the deal that should have been done 2 years ago is at last completed: Microsoft is buying most of Nokia to take control of its smartphone destiny,” Mark Rogowsky writes for Forbes. “Despite saying kind words about having other partners in Windows Phone, though, this move will effectively end the Windows Phone licensing business. It will position Microsoft as a clear number three in the smartphone wars, but with a difficult decision. In combining the operating system and hardware under one roof, Microsoft’s smartphone division now looks like its increasingly go-it-alone Windows RT group and more like Apple.”

Apple “has eschewed ubiquity for profits, consistently garnering between 1/2 and 3/4 of the smartphone industry’s total earnings despite a much smaller market share,” Rogowsky writes. “It builds phones that have roughly $200 in parts and sells them to carriers for an average of more than $600. While that doesn’t mean the company is earning $400 per phone, it’s getting close to $300. The new low-cost iPhone 5C expected to be introduced on Sept. 10 won’t radically alter Apple’s modus operandi. Apple will seek a somewhat larger share of the market, but only if it continues to make significant profits every time the company sells a phone.”

Rogowsky writes, “But unlike Apple, the phones Nokia has been successfully selling aren’t high-margin, high-priced models. And they aren’t selling to Microsoft’s corporate customers either. Microsoft claims they are now a ‘devices and services’ company, but this is the least attractive part of the device business… Nokia lost hundreds of millions last quarter selling Lumias despite hitting a high in Windows Phone sales. While the company has high-end product, in the form of the 41-megapixel Lumia 1020, it doesn’t sell much of it. Nokia has been relying on deep discounting and emerging economies to grow its smartphone business. Objectively, there’s nothing wrong with that. In terms of stated strategy, though, it seems unlikely to get Microsoft where it wants to be.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]

Related articles:
Beleaguered Nokia to sell handset business to Microsoft for $7.2 billion – September 3, 2013
Beleaguered Nokia reports lower-than-expected revenue, Needham downgrades – July 18, 2013
Microsoft and Nokia can’t hide from the very, very ugly truth: Windows Phone is failing miserably – July 18, 2013
Nokia’s Stephen Elop: The worst CEO of all time – June 28, 2013

39 Comments

  1. I don’t think this is going to help MS or Nokia very much but it’s a step in the right direction. MS should flip off their partners, make phones and build an ecosystem. Sure, it’s copying Apple but it’s a good idea. Let google be what MS have been for desktops except google they won’t be making anywhere near as much money, just being the free developer of the operating system for samsung. Google currently makes more money from iOS than they do from android.

  2. What will Microsoft do with the extra 45000 Nokia employees? And what will Nokia do with its remaining 46000 employees and all that cash it’s getting from MS to support the devices and services biz that it still has left, that are also profitable and best in their class.

    1. In FIVE years, Microsoft will be writing this off.
      The MS Mole Steven Elop has destroyed over 50% of the stock value.
      How many of the creative people have left?
      After a “fair and balanced” round of MS evaluations, lots of smart people will be leaving. 😎

  3. But I must admit that Baldmer’s departure, or retirement, is a step in the right direction. Perhaps not towards becoming more like Apple. But, some good news for MS. Gates was good, on the software side. Balmer fú€ked it up!

  4. This is kind of, how kids play fiancial board games. “Oh he’s got that,” no mater how much money I have or how much it costs, I am going to do it too.

    Ohhh bankrupt. Wah wah wahhhhhhhhh.

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