How Microsoft Is Set To Make Phone Industry ‘Like The Hamburger Business' With Latest Deal
For the past few years, both Apple, whose incredibly profitable iPhone was born once Steve Jobs aimed change the “way of life,” and Samsung, which leads the cellular industry with just over a 26% market share of the world's mobile phones, have held a strangle hold on the smartphone industry with their various renditions of the iPhone and Galaxy.
But their reign over your pockets may be coming to an end soon. At least, Microsoft hopes it will, priming itself to mount a real challenge against Apple and Samsung after striking an approximate $7 billion deal with Nokia last night.
The move includes a $5 billion fee for Nokia's devices and services unit and a $2 billion fee for a licensing of the phone company's patents for ten years as part of an agreement that marks the second most expensive acquisition Microsoft has carried out after purchasing Skype for $9.3 billion in 2011. And, while the battle for smartphone supremacy has been seen as a two-headed race between Apple's iOS and Google's Android system in recent years, one expert sees the potential for Microsoft to change the game into a three pronged affair, much like the situation of the fast food industry.
“Microsoft sees a world where there the three big competitors in the wireless space are Google, Apple and Microsoft,” Tech analyst Jeff Kagan told USA Today. “The wireless business is starting to sound like the hamburger business with McDonald's, Burger King and Wendy's.”
The deal had been foreshadowed for years since former Microsoft executive Stephen Elop took over Nokia in 2010 and announced a partnership in 2011, with the two companies working together to develop the Windows Phone.
Since then, the duo has made significant strides forward to become a legitimate contender in the mobile space, with the Windows Phone already surpassing Blackberry to earn recognition as the third leading smartphone brand, a fact that excites the Microsoft's chief as the company looks to the future.
“We are very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together,” a statement by Microsoft CEO Steve Balmer read. “Our Windows Phone partnership over the past two and half years has yielded incredible work – the stunning Lumia 1020 is a great example. Our partnership has also yielded incredible growth. In fact, Nokia Windows Phones are the fastest-growing phones in the smartphone market.”
The phones that Microsoft and Nokia have already made in collaboration have gotten popular ratings themselves. In some cases, they've even outdone iPhone and Android, most notably upon winning PC Mag's annual Readers' Choice award for user satisfaction.
The apparent and most important task now (or, at least, one of this biggest challenges Microsoft has to tackle in order to truly challenge its competitors) is to improve the quality of its software and enlarge its ecosystem of apps in a way that rivals both Android and iOS app stores, to which popular apps like Instagram and Vine are unique.
If Microsoft will experience success post-merger, it may as well start by closing the gap between its around 150,000 apps to Android and Apple's over 700,000. It's a task for which Microsoft's hierarchy, though, has indicated that they definitely have the mental capacity to execute.
“Nokia and Microsoft have always dreamed big,” said Ballmer and Elop in an open letter. “We dreamed of putting a computer on every desk, and a mobile phone in every pocket, and we've come a long way toward realizing those dreams. Today marks a moment of reinvention.”
Photo credit: Jonathan Leibson/WireImage/Getty Images
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