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No quick fix following Microsoft / Nokia mix

04 Sep 2013

The Nokia acquisition is a logical step forward for Microsoft but will not change the company’s position in mobile overnight.

That's the view of Analysys Mason Principal Analyst, Ronan de Renesse, who following yesterday's deal believes the acquisition will have a limited impact on the smartphone market in short/medium term.

"Nokia and Microsoft have been working hand-in-hand for 2.5 years on the Lumia device range and we don’t expect the acquisition to fundamentally change the Lumia team and its product roadmap for the next 12 months," he says.

"The biggest opportunity for Microsoft is in the non-smartphone space.

"Microsoft will gain a foothold in developing market via Nokia’s non-Lumia device portfolio; 45.5% of Nokia mobile device shipments went to Greater China, Middle East & Africa and Latin America in 2012.

"This strengthen Microsoft’s position versus Google in connecting the next billion people."

Under the terms of the agreement, the software giant will pay EUR 3.79 billion to purchase Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash.

But de Renesse believes the software giant must make a decision on the business model to adopt in mobile.

"The handset market is extremely competitive making it particularly hard to sustain high margins and make a profit," he says.

"Microsoft has the ability to undercut its competitors and use mobile as a loss leader to gain global reach for its services and software ecosystem.

"No handset manufacturer except Nokia has been fully committed to Windows Phone platform in the past 12 months.

"Maybe it’s time for Microsoft to abandon its Windows licensing model in mobile."

Will Microsoft's acquisition of Nokia change it's position within the smartphone market? Tell us your thoughts below