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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 1st 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
Miccrosoft Nokiia Deal: A SWOT
S Analy
lysis 15

launnched Lumiia range whhich helped nokia to gaain some maarket share. Nokias Lu umia
brannd features itself from low end to high end market.
m Nokkias Markeet share in Q2 Q is
5% and with thhis market share
s nokia capture fou urth positionn in the Indiian Smartph hone
Marrket. Sony stands on fifth slot with w 4.6 % market shaare4. This ddata revels that
Indiian smart phone
p markket is changging very quickly
q andd companies like Nokia is
tryinng to save its
i market share
s in Inddia. Accordiing to Voicee and Datas report in 20122
the situation was
w differennt for Nokiia. Nokia was w in Betteer position with 27.2% % of
Marrket Share and they occupyo secoond slot in n Indian Market, in fiiscal year 2012 2
5
Miccromax stoood in the maarket with 8.7% 8 of maarket share (Voice & D Data report)). So
this was necesssary for nokia
n to doo something g for gaining some m market sharre to
commpete with competitors
c s who are coming
c withh everythinng in their pportfolio. Home
H
grow wn compannies are undderstanding Indian you uth and cappturing them m by providing
attraactive offers. Nokia annd Microsofft just want to gain marrket share inn Indian Maarket
so thhey make sttrategic alliiance.
Microsoft windows
w is a market leeader in com mputer operrating system m market bu ut in
mobbile segmennt windows is facing reegular challlenges from m its biggest competitors.
Miccrosoft OS in i india is on
o second placep after Apple
A iOS and
a Blackbeerry. 90% share s
is captured by Googles brand
b Androoid 5.4% iss related to Windows O OS and oth her is
for apple
a and blackberry.
b
Regarding SWOT anaalysis there s no data iss available becauseb thiss is respectiively
neww area for reesearch. Daata that is reelated is abo out market shares of ccompanies, their t
currrent positionns and leadeership. I amm using seco ondary resouurces of datta for my paaper.
My study will be b based onn these data..

Market Share
S of Vaarious Brandds in Indian
n Smart Phoone Market ((graph.1)
16 Adit Jha
J

Market Share
S of Anndroid, Wind
dows OS annd others.

SWWOT Analyssis of Nokiaa-Microsofft deal


SWWOT analysiis is refers to four terrms which is used in competitorrs analysis each
com
mpany must care about these four terms.
t fers to S stannds for Strength
Thesse terms refe
of thhe companyy in this paaper this is consider ass the strength of the deeal, W referrs to
Weaakness of thhe companyy in this case this standd for weakneess of the DDeal, O refers to
Oppportunity foor companyy in paper thhis is relateed to opporrtunity for bboth compaanies
whoo came together for deal, T referrs to Threaat from its competitorrs and potential
threeats which can
c affect thhe companyy in this casse threat knnown as thee competitorrs of
the company.

Streengths
Nokkia Microosoft deal iss win-win situation
s forr both comppanies. Miccrosoft will buy
nokkias handseet business and there patents
p for 10
1 years in cash $7.2bbillion. Thiss is a
strattegic alliannce to createe synergy between
b bo
oth companiies. Microsoft is acquiiring
Thiss deal will provide
p stroong platformm to Microssoft for its OS as all kknow that nokia
n
is one
o of the biggest
b brannds in indiaan mobile in ndustries with
w 27.2% oof market shares
therre will be trransfer of great hardwaare team to Microsoft after the deeal. Microso oft is
enjooying seconnd position in i smart phoone OS ind dustry after the
t market leader Andrroid.
Afteer this deall Microsoft and Nokiaa will be ab ble to make stronger suupply chain n for
shippment. Nokkia sells moore than 80% % of windo ows phone butb operatinng system itself
i
has only 4% marketm shaare. By buyying nokia Microsoft not only w will make more
m
monney from each e windoows phone sold but itt also be able a to bettter integratee its
4
Soft
ftware and Hardware
H . Microsoft and
a Nokia is i working ono its full range or Luumia
Brannd which is i targeted toward low wer level in ncome grouup to higheer level inccome
grouup. For Nokkia it is lifee saving deaal because this
t will givve them cassh $7.2. Qu uality
wisee Nokia is always onn front poinnt to its competitors. Nokias L Lumia Bran nd is
makking handsoome moneyy for that companyc which is higgh end smarrt phone in n the
porttfolio.After deal both companies
c w able to provide higgh value serrvices inclu
will uding
Geoospatial servvices. Nokiaaa HARE map m app is now n relate tot Microsofft but nokia will
conttinue work on HARE for f its betteerment 5.
Microsoft Nokia Deal: A SWOT Analysis 17

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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