Microsoft's Nokia move may not be too fruitful: Analysts

The company in a surprise move today announced it was buying out Nokia's devices and services business today

With only 5% of the smart phone market in the country operating on Windows operating system, Microsoft Inc's move, say analysts, to upgrade its hot selling “Asha” range of affordable feature phones manufactured by Nokia on the same platform could end a cropper for the company in India.

This is simply because Nokia has not made any serious dent in the Smartphone market (their phones run on Windows) in the country with only about a 5% market share which puts them fourth in the pecking order.

In a surprise move, Microsoft announced that it was buying out Nokia’s Devices & Services business today.

 

In India the top three players in the smart phone space which include Samsung (26% share), Micromax (22%) and Karbonn (13%) have overwhelmingly voted for Android rather than Windows. As a result over 80% of the mobile operating market in India is on Android. Its popularity can also be gauged by the fact that the platform grew by 189% between January 2012 and January 2013. And even Apple and Blackberry operating systems have been showing an upturn.

Key segment

The Smartphone market is key for any mobile company as it already constitutes for 27% of total sales. And in the quarter April-June this year, it grew by a massive by 167%.  

In two years, industry estimates that it would become over 50% of total sales as more and more subscribers get hooked on to data. Surely, at the moment that battle has been lost for Nokia as well as Microsoft which has been a late entrant in the mobile operating space.

Analysts say that in interactions with the company, Ballmer wants to bring the Asha range, which currently constitutes according to analysts about 10% of the total share of the overall mobile market, into the Windows platform.

If Ballmer is successful, this would increase the Window share of the country’s total operating system from 5% to 15%.

“Microsoft will acquire the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products. Nokia will continue to own and manage the Nokia brand. This element provides Microsoft with the opportunity to extend its service offerings to a far wider group around the world while allowing Nokia’s mobile phones to serve as an on-ramp to Windows Phone,” a company release said.

Analysts, however, say that this would require time as the phones have to be upgraded. Also, with consumer preferences clearly on Android in India, and with hardly any possibility of other mobile players joining the Windows bandwagon, the acquisition might not change the fortunes of the two companies and especially Nokia in India.