A Contrarian’s View of Microsoft’s Announced Plan to Acquire the Mobile Handset Business from Nokia

We all awoke yesterday, Tuesday, September 3, 2013 to the news Microsoft® plans on acquiring the mobile handset business from Nokia. Nokia, in turn, announced its acceptance of Microsoft’s offer. We think this $7 billion planned acquisition will provide Microsoft with a unique opportunity to redesign its brand for small, smart, mobile devices. Further, we see a lot of positive opportunity for Microsoft to improve its sales performance in this market, with little additional risk.

Most of the bad news is already baked into the Nokia product line. The portion of the global market using Nokia handsets built on the Windows Phone O/S (the Lumia product line) is purported to be under 5%. The Windows Phone O/S has been frequently criticized, with a common complaint being a comparative lack of third party applications for the platform. Microsoft’s failures to win market share in these markets has also been widely publicized. Finally, the size and shape of the Lumia smart phone has been described as uncomfortably large and clumsy, in part as the result of the irregular shape of the phone necessitated by the placement of its camera lens in a “bump” on the back.

On the other hand, we use Lumia 925s everyday and need to note our strong satisfaction with the simplicity of the operating system, the lack of clutter to the user interface, and the very high quality of the camera lens and even the software shipped with the smartphone to enhance the quality of the usual picture taken with a cellphone. So Microsoft can benefit substantially by crafting marketing communications capable of informing the public about these important points.

If the product marketing team can capitalize on Microsoft’s position as an underdog in this market, then they should be able to steal some of the “noble rebel” title from Apple, which is, after all, “the empire” in this market.

But Microsoft’s marketing communications and public relations teams have stumbled, in the past. We aren’t ready to place a bet on whether they will successfully exploit this opportunity or not.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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