The tech world is abuzz this week with Microsoft’s $7 billion acquisition of Finnish handset maker Nokia, but one top analyst firm says if it goes according to plan, Microsoft could be a solid third place contender in the mobile phone market to Samsung and Apple.
But some critics, as I’ll note below, say that’s a big if.
Microsoft, which has had a partnership with Nokia since 2011 in which all Nokia smartphones run the Windows Phone operating system, has seen its unit sales increase faster than any other brand in the global smartphone market. The second quarter of 2013 is a typical example in which sales of smartphones running Windows Phone – mostly Nokias –jumped by 77.6 percent to 8.7 million units, from 4.9 million units in the second quarter of 2012. To be sure, market leaders Samsung and Apple sold 187.4 million and 31.2 million units respectively, so Microsoft is still eating their dust.
But Microsoft and Nokia together can gain some serious traction, says IDC in its Worldwide Quarterly Mobile Phone Tracker released today. Overall, IDC forecasts mobile phone sales – a term that includes both smartphones and basic cell phones – will rise by 7.3 percent in 2013 compared to relatively flat growth in 2012.
Looking out to 2017, IDC anticipates that Microsoft will grow its market share in smartphones to 10.2 percent from 3.9 percent in 2013. By 2017, Microsoft “will solidify its position as the number three OS,” IDC stated, and will be within striking distance of number two Apple iOS at 17.9 percent, although still well behind number one Google Android OS at 68.3 percent.
Just to be clear, however, the 2017 forecast is only for smartphone sales, although they outpaced sales of basic cell phones for the first time earlier this year and will be the lion’s share of the mobile phone market soon enough.
Although Microsoft and Nokia hope to be stronger together, the two may have to build Windows Phone adoption alone, IDC states.
“With the acquisition of Nokia … Microsoft will increasingly need to drive share gains by itself as OEM support for Windows Phone is expected to wane,” IDC stated, addressing one of the questions I had about the deal. That is, will Samsung and HTC still sell smartphones running Windows Phone after the Microsoft-Nokia merger is complete?
IDC analyst Ramon Llamas, in an e-mail exchange, told me that remains to be seen.
“With Microsoft and Nokia, vendors like Samsung and HTC will look at their Microsoft relationship with some cautious regard,” Llamas stated, “because I have to think that Microsoft is going to leverage Nokia to the fullest extent in order to grow market share.”
But skepticism remains about Microsoft’s ability to make the Nokia deal work. Om Malik, founder of the tech news blog site GigaOm, detailed the many reasons he thinks Microsoft-Nokia won’t work.
“Microsoft makes a mobile OS that the market doesn’t seem to want. Nokia smartphones sales make drying paint seem like a John Woo thriller. It doesn’t matter from which angle you look, the combination of these two companies into a single entity doesn’t add up,” Malik wrote.
He went on to question the executive abilities of Stephen Elop, Nokia’s president and CEO, who is rumored to be in line to replace Steve Ballmer as CEO of Microsoft, giving Elop’s tenure at the head of Nokia a grade of “B-minus.”
Malik also notes that while sales of Nokia phones have grown dramatically since Windows Phone, it was “only after Nokia cut the average selling price by 20 percent.”
Still other observers say Samsung, in particular, will have such a major lead over the rest of the field, it will be difficult for any of the other contenders to make headway. And don’t forget, BlackBerry was once one of the top dogs in smartphones, but has now slipped to fourth place and is headed to oblivion unless someone acquires that beleaguered company.