The mobile industry got a good shake last week with news of Microsoft’s acquisition of Nokia’s Devices and Services business. For Nokia, perhaps this is a chance for them to focus more heavily on their location and augmented reality services.
In the case of Microsoft, perhaps they will be able to finance further device innovation and become a real competitor to Google’s Android and Apple’s iProducts. In fact, I wonder if this acquisition just might be Microsoft’s ticket to becoming a prominent player in Europe.
At a time when Android and iOS make up over 91% of global smartphone OS adoption, becoming a credible competitor would be a challenge for anyone, least of all Microsoft which has suffered from poor reviews of its Windows OS for smartphones.
However, could they be eyeing the European market as their chance to take a lead? Apple’s expansion strategy so far, has been in support of regions where device adoption is on the rise. But their growth in the EU has slowed over the past year in response to the economic crisis which has proven detrimental to purchases of premium goods, like Apple’s iPhone.
Google on the other hand, has appeared to focus more on markets that provide a strong advertising opportunity. Though smartphone adoption overall is on the rise in the EU, advertisers have been slow to follow suit (outside of the UK anyway).
This has meant greater focus on growing Android market share in more developed mobile advertising markets like North America and Asia. Will this acquisition signal a strong enough alignment between Europe’s much-loved Nokia and Microsoft to help them win favor within the EU?
The window for capitalising on the credibility gained from the Nokia acquisition may be closing rapidly with rumors of a new iPhone with a lower price point and Google’s ability to quickly adapt its strategy to edge out competition. For Microsoft to be successful, it will have to solve a lot of software problems very quickly without dropping the ball on producing quality handsets, as has been Nokia’s legacy.
Microsoft's solutions cannot only be focused on addressing the competition (Apple’s app market, inter-operability for Android devices and Google accounts), but will need to provide a unique advantage to win consumers in the short term and keep them in the long-term. That, in truth, has been Microsoft’s challenge all along.
Instead of developing its niche in the smartphone market, it has struggled to keep up with competitors. We can only hope, for Nokia’s sake, that some divine inspiration comes from those patent acquisitions to help Microsoft find its place in the smartphone world.
Kerri Smith is head of mobile stryategy and performance at Aegis Media's iProspect