Microsoft to use Nokia as a doorway into emerging market smartphone industry

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“When it comes to Nokia, they have been very slow to address the declining sales across the developed world. However they still have that emerging market space as the stronghold, particularly in Africa and also in Latin America. Going forward for Nokia, the real key here was that Microsoft really was in a position where they need to continue their place in the smartphone market,” ETX Capital market strategist Ishaq Siddiqi told CNBC Africa on Tuesday.

 “They’ve come out with this Windows phone under s strategic alliance they signed with Nokia back in 2011. The integration was already there so they’ve established synergies and an understanding between both in a cooperative deal.”

Nokia will sell its handset business to Microsoft for 7.2 billion dollars and grant the multinational software company a 10-year non-exclusive license to Nokia’s patents.

Siddiqi added that Microsoft is also undergoing a change in business strategy, trying to stem the decline of global PC sales and also in their tablet sales, which have failed to pick up.

Microsoft is therefore looking at handset devices as a space to start becoming a formidable threat to the likes of Apple and Samsung, the two current giants in the smartphone market.

“Interestingly, Nokia’s overall market share in the smartphone world has dropped to about three per cent currently from round about 49.4 per cent since 2007, so Nokia is a shadow of what is used to be,” Siddiqi explained.

“Microsoft’s view there is although it has that three per cent market share, predominantly in the emerging markets space, perhaps now they can start pushing forward into the developed market space. I think this is very good news for consumers in the emerging market world.”

Microsoft’s operating system in the Nokia handsets had been a big driving force for profitability and has the potential to address the competiveness in the global smartphone market by pricing their models at a cheaper rate. This will give them additional entry into emerging markets.

“It looks like this deal was long in the making and when it comes to addressing the actual situation in the smartphone market, Microsoft really had to pull the trigger at the right time. For Nokia, it is still a dominant force in the emerging market space and I think that’s what Microsoft are really looking at,” he said.