“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.]
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