Tuesday, September 3, 2013

Microsoft’s new Handset Business

Microsoft’s new Handset Business

Microsoft recently acquired the handset making business of Nokia. This is a confirmation that Microsoft’s mobile strategy for the last six years has been off. Microsoft had a mobile operating systems business exceeding $100M in 2007 that was instantly killed off by the introduction of Apple’s iPhone. Since then, the market is selling displays connected to the Internet, ie. mobile devices where software is an integral part. Unfortunately, this is not what Microsoft has been doing. As a matter of fact, Microsoft’s biggest competitor in this space isn’t Google or Apple:
  • Microsoft’s #1 competitor is Samsung at 15x “Nokia”
  • Microsoft’s #2 competitor is Apple at 10x “Nokia”
Microsoft needs to be an unchallenged #3 in this market. If Microsoft can't handily beat LG, Microsoft should create a niche market or invest in Samsung. At the present time, Microsoft is 35% behind LG, who just put out a great-looking G2 phone, and Microsoft further has a lame duck CEO in the departing Ballmer. A required first step for Microsoft is to immediately triple revenues for “Nokia.” It seems Redmond should entertain offers from McKinsey or BCG for what to do.

Conclusion

  • Nokia’s handset business ran low on cash.
  • Microsoft acquired it on September 3, 2013.
  • Microsoft still does not have a successful strategy in mobile computing and services.

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