Microsoft tackles Apple, Samsung with Nokia deal

• Microsoft tackles Apple, Samsung with Nokia deal 

  
  

  Arjun Kharpal | @ArjunKharpal

  Can Microsoft accelerate Windows phones growth?

  Friday, 25 Apr 2014 | 4:20 AM ET

  Daniel Gleeson, mobile analyst at IHS, says that Microsoft's control over Nokia's software and hardware businesses gives the group greater ammunition to challenge Android and iOS leadership.

  Microsoft's 5.44 billion euro ($7.5 billion) acquisition of Nokia's devices business could give it the impetus to take a bigger slice of the smartphone pie, analysts told CNBC on Friday.
  The U.S. technology giant closed the long-awaited deal with Finland's Nokia at the end of the week, in what is viewed as a challenge to Apple and Samsung's success in the smartphone market.
  Read MoreNokia seals Microsoft deal amid new CEO speculation
  
  Microsoft produces its own operating systems (OS) for smartphones, but compared to other players it is small in the market. The Windows smartphone OS had a 3.3 percent share of the total smartphone market, compared with Google Android's 78.6 percent and Apple's 15.2 percent in 2013, according to data from IDC.
  In a statement released on Friday, Microsoft boss Satya Nadella said the latest move by the company would help with its "transformation". A Microsoft spokesperson told CNBC via email that the deal with Nokia was a "milestone", but integrating the new business would "take some time to complete".
  Around 80 percent of the smartphones running a Windows operating system are already manufactured by Nokia, according to data provider IHS, making the telecommunications company an ideal partner for Microsoft. Control of Nokia's handset arm could help Microsoft bolster its smartphone offering.

  

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  "Quite clearly, it lets Microsoft have full control over not just the software, but of course now the hardware direction as well," Daniel Gleeson, mobile analyst at IHS, told CNBC in a phone interview. "For Microsoft, it means they are able to bring that key partner under its wing, and really try to build something much bigger than it has been, and really try to make a big breakthrough and challenge the likes of Android and Apple's iOS system."
  Read MoreNokia opens a new chapter as it closes Microsoft deal
  
  'Huge capabilities'
  Stephen Elop, the former CEO of Nokia, will be heading up the devices and services division at Microsoft. Elop stepped down as Nokia boss when the acquisition by Microsoft was announced. He formerly worked at Microsoft before Nokia.
  It is unclear what former Nokia products Microsoft will focus on, but ex-Microsoft CEO Steve Ballmer gave some hints last year. He told CNBC that the acquisition of Nokia would create "interesting opportunities" for PCs, as well as tablet devices.
  Read MoreBallmer: Nokia deal opens possibilities for tablets
  
  Buying Nokia's devices unit will help Microsoft offer a more unified product, Samuel Gee, senior technology analyst at Mintel, told CNBC.
  "For consumers, the most noticeable impact of the deal will be thanks to the vertical integration of handset manufacture into Microsoft's smartphone proposition," Gee said via email.
  "With a production line more like Apple's – where the OS and the hardware are created to specifically complement each other – the company will be hoping to gain an edge by producing devices that avoid problems arising from the sometimes haphazard pairing of a single proprietary OS – like Android – with phones from a number of manufacturers with a huge variety of capabilities."

  

  Arjun KharpalNews Assistant, CNBC EU News Digital Team

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