Microsoft's Nokia acquisition and slow downs
I'll be honest in saying that I'm a little confused by the delays in China and Asia on the Microsoft/Nokia deal. While I can acknowledge that one company taking over another is generally a thing which has a lot of potential for an economic upset, I would argue that most times that only happens when a company buys out a competitor or potential competitor. And the threat there is that the company may just be buying up the opposition to close them down.
Another potential field of concern is the creation of a monopoly. But again, that is only a concern if both the purchaser and purchased company are in the same field. Microsoft can not increase its current position in the cell market to a monopoly by buying Nokia's hardware division, because it has zero market share to begin with. For same reason, even if Noka did have a monopoly, which it doesn't, the merger would not increase the power of that monopoly. Zero plus any other number won't result in a bigger number.
In other words, it is quite obvious that Microsoft's plans are what they claim them to be. Since there should be no direct market impact of this move, and no reason to suspect foul play on the part of Microsoft there is really no justifiable reason to either block the deal or impose sanctions as India basically did by slapping almost $1 Billion in fees on Nokia.
My take on it is that since Microsoft currently has no hand in the cellular hardware and they DO have a mobile OS that runs on phones, they have a legitimate interest in the acquisition and no value to gain by shutting down operations. Not that it really should have mattered. Nokia was hanging by a thread. Without this deal, Nokia may have perished in a few years time. If nothing else, the Microsoft deal grants more stability to the company over the coming years. And, if Microsoft decides to get out of the hardware business down the road, they are more likely to try and sell that division back off, than close it down. Companies rarely just throw away a $7Billion investment.
As a result, countries like India and China should have been the first to approve the deal. And, there is a secondary reason that is true. India and China are two of the markets where Windows Phone is gaining traction fast. So, not only is the labor cheaper, but Microsoft really needs to keep servicing those markets in the best way possible to help buy them time in gaining traction elsewhere. Two parts of that equation are cost of manufacturing and cost of shipping. Move workforce out of India and costs go up, which means phone prices go up, which means market share may be negatively affected.
Either way, it still looks like the deal will conclude. Just not until the end of April now.
Whether or not the deal is a smart move for Microsoft is a different question. I personally don't think it is. In the same way I felt producing the Surface tablet was a bad move, I feel getting into hardware directly is a bad move for MS right now. Google got it right with the Nexus line. Work WITH an OEM to produce the hardware you want to see rather than slapping them in the face by building it yourself. That way, you show confidence in your OEM's. You also get double the advertising. You can promote such a flagship device, and the OEM will push it as well. And both help the ecosystem as a whole.
By buying a hardware competitor of your OEM's, as long as they have another option on the OS front, they will stop emphasising your platform. In other words, OEM's already basically ignore WP8 on the advertising front. Buying a competitor will just result in them pumping more money in advertising their Android phones taking more money away from Windows Phone in general. Sure, Google owns Motorola, but that wound has had time to heal.
Another potential field of concern is the creation of a monopoly. But again, that is only a concern if both the purchaser and purchased company are in the same field. Microsoft can not increase its current position in the cell market to a monopoly by buying Nokia's hardware division, because it has zero market share to begin with. For same reason, even if Noka did have a monopoly, which it doesn't, the merger would not increase the power of that monopoly. Zero plus any other number won't result in a bigger number.
In other words, it is quite obvious that Microsoft's plans are what they claim them to be. Since there should be no direct market impact of this move, and no reason to suspect foul play on the part of Microsoft there is really no justifiable reason to either block the deal or impose sanctions as India basically did by slapping almost $1 Billion in fees on Nokia.
My take on it is that since Microsoft currently has no hand in the cellular hardware and they DO have a mobile OS that runs on phones, they have a legitimate interest in the acquisition and no value to gain by shutting down operations. Not that it really should have mattered. Nokia was hanging by a thread. Without this deal, Nokia may have perished in a few years time. If nothing else, the Microsoft deal grants more stability to the company over the coming years. And, if Microsoft decides to get out of the hardware business down the road, they are more likely to try and sell that division back off, than close it down. Companies rarely just throw away a $7Billion investment.
As a result, countries like India and China should have been the first to approve the deal. And, there is a secondary reason that is true. India and China are two of the markets where Windows Phone is gaining traction fast. So, not only is the labor cheaper, but Microsoft really needs to keep servicing those markets in the best way possible to help buy them time in gaining traction elsewhere. Two parts of that equation are cost of manufacturing and cost of shipping. Move workforce out of India and costs go up, which means phone prices go up, which means market share may be negatively affected.
Either way, it still looks like the deal will conclude. Just not until the end of April now.
Whether or not the deal is a smart move for Microsoft is a different question. I personally don't think it is. In the same way I felt producing the Surface tablet was a bad move, I feel getting into hardware directly is a bad move for MS right now. Google got it right with the Nexus line. Work WITH an OEM to produce the hardware you want to see rather than slapping them in the face by building it yourself. That way, you show confidence in your OEM's. You also get double the advertising. You can promote such a flagship device, and the OEM will push it as well. And both help the ecosystem as a whole.
By buying a hardware competitor of your OEM's, as long as they have another option on the OS front, they will stop emphasising your platform. In other words, OEM's already basically ignore WP8 on the advertising front. Buying a competitor will just result in them pumping more money in advertising their Android phones taking more money away from Windows Phone in general. Sure, Google owns Motorola, but that wound has had time to heal.
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