After licensing its Windows Phone platform to Nokia for couple of years, Microsoft will be acquiring Nokia for $7.2 Billion.
The Big Players
While Apple has always been a proponent of integrated hardware & software approach, Microsoft ran the business of licensing its core software products to hardware manufacturers for years. And the model worked well for them.
Apple had a minuscule market base. But it started to turn around after Jobs was back for his second innings. The iPhone showed how hardware, software and services integration and a closed platform can lead to success.
Google’s Android seized more than 75% of world smart phone market by giving away Android OS to phone manufacturers to download, modify, customize for free. Acquisition of Motorola was one step towards creating a integrated software, hardware and services model for Google’s ecosystem. The new Moto X is result of that.
Samsung has the largest share in the Android phones market. Nothing stops them from forking Android into an own version altogether. They might already be working on that. So that gives Google enough reason to hedge its bets on Motorola.
Amazon has already forked Android for their tablets and they may soon be launching Amazon brand of smart phones running their version of Android.
One big player that’s still missing on the smart phone train is Facebook. And there’s a glorious phone manufacturer of the past that’s slowly fading to oblivion - BlackBerry. The time might be just right for Mark Zuckerberg to place a call to BlackBerry HQ at Waterloo, ON and before they fold up completely.
What about open?
So everyone is aiming for closed platforms, what about open? We still have Firefox and Ubuntu Phones. How much dent Firefox OS or Ubuntu Phone can put in the consumer smart phone market is something to watch for. They are most likely to appeal to a very niche market of nerds. To capture any noticeable market share, these platforms will need to create phone that have a healthy app ecosystem, brilliant UX that appeals to most users and solid beautiful hardware.
With this Nokia deal, Microsoft is aiming at the integrated hardware, software and services approach.1 But Nokia is the largest manufacturer of Windows Phones already. What does this deal change? Nothing, if you ask me.
Nokia has always produced some of the most reliable hardware devices. This integration may be able to produce the next game changing smart phone. But that leaves the dumb phones/feature phones out of the equation. There will be a market for them for next few years at least. Most likely they’ll keep running on the current Nokia software with few incremental updates. There is bracket - the high end feature phones like Nokia Asha series - that can run a stripped down version of Windows Phone optimized for low end hardware specs.2
If Microsoft can do mobile apps right for enterprise productivity software (Outlook, Office etc), they can aim to grab BlackBerry’s enterprise market.
What Microsoft plans to do with Nokia, only the suits in boardrooms of these two companies can tell. But I don’t see them going beyond their current market share significantly.
When Microsoft decided to give $1 Billion to Nokia for using Windows Phone platform someone said - “Two turkeys do not make an Eagle”. That statement has become much more relevant today.