International Journal of Business Management and Leadership.
ISSN 2231-122X Volume 5, Number 1 (2014), pp. 13-18
Research India Publications http://www.ripublication.com
Microsoft Nokia Deal: A SWOT Analysis
Adit Jha
Faculty at Biff & Bright College of Technical Education, Padasoli, Dudu, jaipur aditjha.1986@gmail.com +91- 9660078944
ABSTRACT:
This research paper deals with Contemporary Issue of Marketing that is Microsoft-Nokia Deal on September 3, 2013. Paper is a exploratory research which deals with current acquisition of Nokia by Microsoft. The purpose of this paper is to do SWOT analyse for both companies and to analyse what benefits they will get after this deal and what challenges they will face in future. This is a Process of acquisition starts in February 2011 and completed in 2013. This acquisition is a strategic move from both Microsoft and Nokia. Paper will provide a study of Indian smart phone business which is one of the best emerging markets in the world. I will try to do SWOT analysis of the deal. Study will be based on analysis of Primary data and secondary data which is taken from Indian communication market, different reports from experts on the topic covers the secondary data and in primary data Survey research both field and online research and interviews is used. Interviews are related to academician, Industry people and consumers of Cell Phone. This is a contemporary topic which covers the study of Indian Cell Phone Market, Competitor analysis, Strategic move for saving, expanding and creating new emerging markets, Market Share of Nokia and Samsung, Market Share of Android, Apples iOS and Microsofts OS in smart phone market.
KEYWORDS: Microsoft-Nokia deal, SWOT analysis of Nokia Microsoft deal, market share of Android OS, Apple iOS, and windows OS Acquisition, Indian Mobile Market,
INTRODUCTION: Microsoft-Nokia Deal is a new dawn for communication industry. On the day September 3-2013 Microsoft Acquired nokias handset division and services, License of nokias patents & License to use nokias Mapping services. Microsoft acquire Nokia by Forking out $ 7.2 billion means 490 thousand Cr rupees deal all payment will be done in cash transaction and hope to close in first quarter on 2014.This move is an attempt by Microsoft to make leadership in software market. Deal will give 14 Adit Jha
benefits to both parties as they will share strengths of both companies and will work together for meeting market needs and to grasp the Gap in the market. Microsoft announced his partnership with nokia in February 2011 Company aims to accelerate his growth and market share and profit through mobile devices through greater creativeness and innovativeness in their Operating System to deal with the Market Competitors. For Nokia this deal is significantly attractive to earning and strengthen its financial position, and provide solid base for future investment in continuing business. Its a bold step into the future a win - win for employees, shareholders, customer of both companies bringing these great teams together will accelerate microsofts share and profits in phones and strengthen overall opportunities for both Microsoft and their partners across our entire family of devices and services. We are excited and honoured to bringing nokias incredible, technologies and assets into our Microsoft family giving our long partnership with nokia and many key nokia leaders that are joining Microsoft, we anticipate a smooth transaction and great execution. 1 For nokia this is the moment of reinvention and form a position of financial strength we can build our next chepter. 2 Building on our successful partnership we can bring together Microsofts best software with the nokias best product engineering, award wining design, and global sales and marketing and manufacturing. 3 Under the term
and conditions Microsoft will acquire sustainably all nokias devices and services business including mobile phone and smart phone devices business units as well as an industry leading design team, Operation including all nokia devices and services related production facilities, devices and service related sales and marketing activities and related support functions. Approximately 32000 employees will be transferred to Microsoft including 4700 people in finland and 18300 employees directly involved in manufacturing, assembly and packaging of products worldwide. The operations that are planned to be transferred to Microsoft generated an estimate EUR 14.9 billion, or almost 50% of Nokias net sales of year 2012.
Review of data This is a new topic for research which came out because of the deal between two giant companies Microsoft and Nokia. Indian Smart phone is third largest smart phone market in the world Recent data is related to NEWS in different newspapers, interviews. Data related to the market share of Nokia, Samsung, Micromax, Carbon, Apple is available from companies website and from some reports like Survey done by International Data Corporation (IDC). Smartphone business in India is going to change with the new approaches by companies. According to latest report by International Data Corporation (IDC) Korian Gaint Company Samsung win the race and got 1 st slot in the Indian Mobile market but their market share fell to 26%. Indian Mobile vendor Micromax came to second slot with the market share of 22%. Overall in India vendors shipped 9.3 million smart phones for Q2 in 2013 compared to 3.5 million units in the same period of 2012.Karbon Mobile is second Indian Mobile manufacturer which is on third place in the list with market share of 13%. In Q1 2013 Karbon have 10.9% market share. Previously Nokia was market leader in Indian market but they are not doing well in Smartphone business and with its Symbian OS. Nokia gain some market share when they joined hands together with Microsoft and Mic
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Weakness Deal has its own weaknesses. Both companies Microsoft and Nokia is facing shrink in their market. Microsoft is market leader in computer OS but in Smartphone section it has only 4% of market share and Nokia that was Market Leader in indian Market has lost its Share. Deal is too late when market is almost captured by Googles Android OS. Today Android has 90% of Market Share in Smart Phone Section. Many companies adopt Android OS as the requirement of time or for the better services. Companies like Samsung came with wide range with smart phones and they targeted Indian youth market. Nokia-Microsoft is lags behind to market leaders and they are not attracting developers to make apps that are one of the most important factor in purchasing Smartphone. In Computer world Microsoft has its Monopoly but in Smartphone section Apps developers are more interested to develop Apps for Android and iOS. This situation is like a Chicken/egg problem Microsoft needs market share to attract apps developers but they need developers to build market share. 6 Beside the lack of developer support, Microsoft suffers from what Neil maswton of strategy analyst call the companys own Glacier-Like pace of development. In high end smart phones Microsoft has not been able to deliver software that works with fastest mobile chips unlike Andriod. If we talk about low end service it has not been able to reduce in order to compete, some android devices wholesale for just $35, While the cheapest Smartphone device is $ 110 in U.S. market in indian market it cost $147. 7
In countries like U.S. people dont like to share things through Bluetooth but in countries like India people commonly use Bluetooth as their way of sharing files. In many of Windows phone that feature was not available even Lumia 520 was also suffering from this. This was the problem for Nokia Lumia brand. After this deal Microsoft will also get a troubled area of Nokia Ovi store in their brand. These are the weakness of the deal which both companies will try to remove.
Opportunities This deal has great opportunity if both companies utilise their resources in optimum way. For Microsoft opportunity is to gain profit as it expects to get 14% of market share and want to be second largest Operating system company for Smart phones. According to Blelfiore Microfsoft will change in its core system software to allow for new hardware which will all smart phone devices of Nokia.Microsoft is working upon its software to manage incoming photos to work with Nokia lumia 1020 with its 41 Mega Pixel camera. Software will allow to images at the one point of the time. This opportunity grasp by both companies to make future smart phones. India is still profitable market for nokia and Nokia has big market in India. Nokia need a Operating system for its devices and Microsoft need Device for its OS. The future phone segments contributes 60-70% of the overall device market in India and no one can ignore it but going forward everything will be Smart phones and that is growth is happening (Anshul Gupta principal research analyst with gartner.) 8 . Nokia has opportunity in Low Segment smart phone market in India. Nokia identify the opportunity in low segment and they launched a range of Smartphone Low to High in segment Nokia 520 to Nokia 1020.In larger context both companies aims to move 55 Million Smartphone to 250 million by 2016. (Neeraj Roy, The Founder CEO and managing Director of digital and mobile entertainment company Hungama Digital Private Limited) 9 .
18 Adit Jha
Threat India is an emerging market in smart phone segment. Both Nokia and Microsoft is losing their market share to Market Leader Samsung. Indian Mobile companies like Micromax, Karbon are also doing very good in smart phone sector. They all are coming with Android and they have new features to attract Indian youth consumer and price sensitive market. Not only for Nokia indian players are threat to market leader Samsung For example Canvas 4 is priced to 17, 999 by Micromax while Samsung Galaxy S4 is currently pricing 33999 and features are same in both 10 . is growing regularly and coming with new range of products which is providing better services and they are giving same range of products in low prices.
Conclusion This deal was necessity for both companies Nokia and Microsoft because they are loosing their profitable markets. This is true that Deal came very late when all market is captured by Googles Android and Samsung. Microsoft want to capture market in smart phone segment so they want a well accepted brand to feature their Windows OS. Hardware which is well known and have good team to work.In same manner Nokia is getting a OS which is well known this is all about fighting with own weakness and with Competitors. Both Microsoft and Nokia wants to need work on some part of their areas which is their loose points. Both Companies must work together as a team because 32000 new employees will be transferred to Microsoft and they will get new specialise team in hardware. The thing is how Microsoft and Nokia together can make innovations to their existing products line.
References
[1] Wingfield nick, New York Times sep 4, 2013 Microsoft eyes Apple like revival with Nokia deal. Retrieved from www.articals.timesofindia.indiantimes.com. [2] Ando Ritsuko & Rigdy Bill (2013 September 4) Microsoft swallows Nokias Phone business for $ 7.2 billion. [3] Elop Stephen, Balmer steve [4] International Data Corporation (IDC) report top five slots. Micromax giving a run for its money. [5] Voice & Data Survey report Samsung beats nokia to emerge no.1 in India. www.siliconindia.com [6] Accelerating Growth, (2013 September 2013) Microsofts strategic rationale for deal announced with nokia. www.microsoft.com [7] Micromax looks to challenge Samsung and apple in India smart phone market. (2013 September 28) Retrieved form www.articals.timeofindia.indiatimes.com [8] Gupta anshul & gartner, principal research analyst IDC India. [9] Roy Neeraj, The Founder CEO and managing Director of digital and mobile entertainment company Hungama Digital Private Limited. [10] Ghosh shuvik, Choudhary vidhi (2013 October 22) Microsoft nokia deal may impact smart phone prices.
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