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23 September 20130 Comments by Jon M

Reflections on Microsoft & Nokia (part 3)

nokia microsoft 3

So it’s now been several days since the shock announcement that Microsoft are acquiring Nokia. And we’ve had plenty of time now to hear opinions from talking heads and industry experts as well as let the news sink in. But now it’s time to look back and what exactly happened, why and what it means for consumers and all companies involved in mobile technology. This is final part (part 1, part 2) in our in-depth look and the background and future of the historic £4.6 billion deal.

The future for Nokia (and Blackerry)?

But what does the deal mean for the future of Nokia? Outgoing Microsoft CEO, Steve Ballmer, has maintained that the company is still committed to Nokia’s Finnish employees. However, you don’t have to be too cynical to assume that it’s only a matter of time before more redundancies, and many roles are outsourced by the American company.

There are also ethical concerns as Nokia were well-regarded as by far the most morally sound of mobile phone manufacturers. Apple’s contractors such as Foxconn have long been in the new for their appalling labour conditions and most smart phones and smart phone parts are manufactured in the Far East where workers’ rights are far from the standard expected in Western Europe.

It remains to be seen how long Nokia’s ethical credentials will last under the guidance of Microsoft. It only seems a matter of time before manufacturing is moved completely to China. It’s also been alleged that they will now aim to cut costs by sourcing metals used in their phones from illegal mines in Africa.

The deal also shakes up the entire smart phone market. Now, there really are only three big players left with a chance in terms of mobile software – Google with its Android operating system, Apple with iOS, and Microsoft with Windows Phone.

Previously, Canadian manufacturer BlackBerry (formerly RIM) had also been in the running although, like Nokia, its fortunes have also significantly fallen in recent years . With this new alliance forged between Nokia and Microsoft, it’s hard to see a place for BlackBerry in the future of smart phones. It has recently seen its revenue and sales fall off a cliff edge so much so that it has been desperately trying to find a buyer. With Microsoft choosing Nokia over BlackBerry, it’s hard to see how they’ll be up to compete with the new big three of Google, Apple and Microsoft.

As for the future of Microsoft and its aim to have a meaningful presence in the mobile market, it’s really too early to tell now. The duopoly of Android and iOS seems incredibly solid at the moment and it’s hard to see how Microsoft will be to chip away at their market share. However, it is clear that they are willing to spend and do whatever it takes to have a chance to be one of the major players in this business.

Having said that, the underlying dynamics that have meant Windows Phone has not been the success Microsoft hoped are not changing in any way with this acquisition. The strategy has been failing so far, as hard to see how ploughing even more money into it is likely to change any of the fundamental reasons why they haven’t been successful so far.

The purchase of Nokia by Microsoft was far from unseen by industry insiders. However it’s certainly a major event in the saga of the smartphone era. In many ways, this bold move was an entirely necessary gamble for Microsoft if they are to have any hope of maintaining a foothold. In the broader picture, Microsoft have been struggling to keep up as a technology company in the age of mobile and it really needs to make mobile phones an integral part of its business plan if it is to maintain any of its dominance it enjoyed in the 90s and early 21st century.

So, over to you, our readers. What do you make of this shocking development after reading all three parts? Do you think Nokia’s ethical manufacturing processes will suffer all that staff will be laid off in the coming months? And, most importantly of all, how will it affect the balance between the three major mobile operating systems in the coming years?

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