Microsoft Acquires Nokia: Will Nokia Be Saved?

MicrosoftA recent announcement that Microsoft has acquired the devices division at Nokia has sent global smartphone markets into a tizzy of sorts. This has put market watchers in a quandry as to the fate of the Nokia’s flagship Lumia smartphone series. Will this new development actually save the brand and increase flagging sales? Or will it go down in history as one of the most noteworthy blunders ever made? Will this deal actually save Nokia as a brand?

These questions can only be answered with the passage of time and further market developments. In the meantime, experts anticipate a major rebranding for the smartphone.

What Did Steve Ballmer Say About This Decision?

Before he quit, Microsoft CEO Steve Ballmer was quite forthcoming about the boldness of this decision. He called this deal a bold one, keeping the hardware behemoth’s future in mind. He also upheld the qualities of the Lumia smartphone brand, especially the 1020 smartphone which did not receive its deserved sales figures in the global market.

How Will This Deal Impact Nokia And Microsoft?

This deal,which will be fully operational from the first quarter of 2014, will mean many things for Nokia and Microsoft. Some of the possible effects are given below:

  • Beefing up of Windows phone environments in global markets
  • Positive influence on properties held by Microsoft
  • Total acquisition of Lumia’s hardware and software segments by Microsoft
  • A unified brand totally covering all major devices from the Microsoft stable
  • Positive developments as to growth of mobile computing based on software and transformation of mobile usage experiences
  • Discarding of the Lumia name and rebranding of the phones as Surface smartphones
  • Incorporation of existing technology on the Lumia into Microsoft promoted tablet devices

The deal with Microsoft may well salvage the reputation of Nokia as a brand. Moreover, Nokia can nowcompletely focus on producing improved feature phones that may ramp up the company’s sales figures in the market.

Total Implications For The Lumia And The Sales Storyimage001

This deal will have a huge impact on the fate of Lumia as a brand. First of all, the new Microsoft Lumia, if it is named so, will bring together the very best of hardware and software expertise. While Microsoft may not earn huge amounts in profits in the next few years, it will certainly yield larger profits to investors after a minimum trial period.

Microsoft can also expect an increase in hardware sales to carriers and clients. Moreover, after a trial period of about three to five years, Microsoft can easily earn a huge profit by selling off the brand altogether after nurturing it throughout these years.

What Happens To Nokia?

Nokia can expect a plethora of changes on account of this deal. These are:

  • The iconic trademark owned by Nokia will be used by Microsoft
  • This will be operational for a total period of ten years
  • Microsoft will purchase the license for using the trademark on smartphones
  • It will also purchase the Nokia Asha series of phones along with the Lumia
  • New Lumia phones at Microsoft will be created by an unchanged technical team
  • Stefan Pannenbecker, the design head for hardware, will shift to Microsoft
  • The rest of the design and manufacturing units will follow in his footsteps
  • There will be one unified brand name that cuts across multiple platforms
  • Quality levels will be kept intact along with better user experience and superior hardware
  • Microsoft will use Nokia’s unique approach to creating, designing, engineering and manufacturing smartphones

What Will Happen To The Nokia Lumia Brand After This Deal In Recent Times?

The Nokia Lumia itself will set off a price war in the Indian market. This is possible because of Microsoft’s plan to reduce Lumia handset prices in India and many other global smartphone markets. This will drastically alter segment equations and counter Apple and Samsung who lead the smartphone race presently.  Nokia still features in the Top 5 phone manufacturers in India.

With Microsoft’s help, Nokia can finally match these two behemoths in sales. As far as Microsoft is concerned, it will be on its way towards becoming a major manufacturer in the software and hardware market along with the smartphone market. Microsoft may discard the feature phone segment altogether and focus on building more efficient smartphones.

This deal will also signify the production of premium high end smartphones at surprisingly lower prices than usual. Prices for Lumia smartphones are expected to be around INR 2,040 to even INR 2,720 lower. This might actually ramp up sales for the Lumia in the smartphone market. It might be in a position to take on and even outstrip local players like Karbonn, Lava and Micromax.

BlackBerry will be hurt due to lower end price slashing and even Samsung might feel the pinch of such a strategy. However, Microsoft will surely have a tough job on its hands. Nokia’s brand image has taken a beating in recent times and the responsibility of salvaging its reputation lies on the capable shoulders of Microsoft.

The Bottom Line

Microsoft will consolidate its own position in the global smartphone market with this deal, while pulling Nokia out of the red at the same time. The acquisition will actually save Nokia and help Nokia as well. It all translates into a win-win situation of sorts. Brand unification and integration of Microsoft’s Windows phone will only do the Lumia a world of good. Furthermore, sales will increase due to reduced prices, and Nokia’s design and feature principles will not be compromised and will be kept intact owing to the unchanged teams working at Microsoft.

 

Reference

http://articles.economictimes.indiatimes.com/2013-09-04/news/41765617_1_microsoft-india-nokia-lumia-mobile-handset-market

http://seekingalpha.com/article/1684562-microsoft-why-i-like-the-nokia-acquisition

http://www.wpcentral.com/nokia-go-away-lumia-line-microsoft-seeks-unify-branding

http://www.gottabemobile.com/2013/09/02/microsoft-buys-nokia-lumia-and-windows-phone-united-under-one-house/

http://www.winbeta.org/news/microsoft-and-nokia-seek-unified-brand-across-lumia-and-other-windows-devices-surface

http://conversations.nokia.com/2013/09/04/whats-next-for-lumia-and-asha/

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