People are finally starting to wake up to the fact that Windows Phone 7 is a rather good mobile OS, and and the Nokia Lumia 800 running it is a desirable device – a positive result for both companies. However, the rumours that Microsoft may out and out buy the Finish mobile phone company refuse to die – with the latest round of speculation started by Danske Bank. So how likely is such an acquisition in reality?
The fate of WP7 is tied to Nokia because they are the only manufacturer that has come out in support of WP7 as their only OS – whereas Samsung and HTC both utilize Android for their flagship devices and are doing quite well with that setup. Nokia needed a boost with their flagging sales and apparent inability to make a dent in the smartphone market – and Microsoft gave them that boost with investment and the cross promotion by having Nokia devices as the flagships for WP7. Nokia’s success is therefore tied to Microsoft – but the other way round? Not so much.
Windows 8 is looking to be a better tablet OS than Android in early tests and as such may well find favour with manufacturers for that form factor. The chance of people with a Windows 8 tablet moving over to Microsoft for the mobile will then be helped by easy syncing and integration. Having a variety of manufacturers and devices offering this multi-device interaction will be key. If it is only Nokia making the devices then the Redmond-based giant will be going up against Apple, the current tablet leader by a vast margin, in a head-to-head, device vs device. If Windows is on a raft of different devices from different manufacturers and they all play well together – then Microsoft could play that to their advantage just like they did in the desktop OS wars.
It would be foolish, then, for Microsoft to acquire Nokia as it would alienate the other manufacturers – and choice is one of their main advantages over Apple. Yes people also have a lot of choice with Android, but their attack on Android is a different approach – legal. If Microsoft can sideline Apple by offering a beautiful and easy to use OS (Android is still relatively difficult to set up and the skins make it fragmented), then WP7/WP8 will start to look a lot more attractive. The legal approach to Android, meaning that most manufacturers already pay Microsoft a “license” to use Microsoft patents in their phones – the free mobile OS is not free any longer. Microsoft can therefore compete on price with Android – and suddenly the game opens up. This is not a tactic that would work so well if they were locked to a single manufacturer.
Yes Microsoft does manufacture the Xbox itself – and a lot of commentators give that as their reasoning that they might take this route again – but the mobile OS space is a lot closer to the desktop than the games console. The market for games consoles only has three competitors – all with unified OS and hardware – whilst there are numerous smartphone manufacturers. But Microsoft also competes with these games consoles directly with PC gaming – where you have numerous manufacturers of all the various parts – from graphics cards to screens. The Xbox is a successful division, but the games market forced Microsoft’s hand into software/hardware unification – the mobile market is different and Microsoft is still able to forge their own path.