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The Microsoft - Nokia marriage threatens Apple

25 October 2013 / 22:10:08  GRReporter
3801 reads

Ivan Petkov

The market for smartphones is close to the saturation point. Competition is fierce and the dynamics relentlessly cruel. On the other hand, the tablet market is still growing at rates exceeding those of personal computers (PC) in the face of desktop and laptop computers. Competition is not so weak either and twists are possible at any time - yesterday's winners can quickly lose positions and become tomorrow’s losers.

Today we will continue with the "Battle of the Titans," which is entering into its next phase, namely the battle between the major players, in historical perspective, in the field of high-tech innovation which are Microsoft and Apple. Very recently, at two opposite corners of the world but on the same day, they presented the new series of devices that will fight for the users’ hearts and wallets. Let us find out more details, but here is the background first.
 
Switching the roles in the course of development. Microsoft has had the monopoly of the PC market for over 20 years now. It has gained such a strong position that none of the competing offers has even been able to approach their overwhelming market share. All hated it, but all used it. The future seemed bright but, as it turned out later, the old saying that nothing lasts forever was confirmed. It seems that the abrupt change in the sector of smartphones that Apple began in 2007 had unlocked Pandora's Box regarding Microsoft. Focused entirely on its operating system for desktop computers and with good positions in the segment of smartphones, Microsoft had proved totally unprepared for the mobile revolution. A new class of devices had appeared that were able not only to establish themselves on the market, but also to generate unprecedented revenue from consumer electronics. I will just mention that, in 2011, Apple managed to collect more cash than the US government had had, as well as to gain more profit than Microsoft had gained from all its various products and services from the corporate segment and end users! All this was due to the sales of two devices, iPhone and iPad, alone. Microsoft was not pleased with those developments but, on the other hand, this had increased the company’s interest in the market of consumer electronics.

Let us go back to the situation at Microsoft. After missing the initial boom in mobile technology, the company from Redmond decided to catch up in its typical style. It created, from scratch, a new mobile operating system to replace Windows Mobile and called it Windows Phone. Unlike its predecessor, which was many advanced users’ favourite for its personalisation options, the new mobile operating system was similar to that of Apple. Not in the visual sense, in which it definitely has its own unique individuality, but in terms of the overall design and philosophy followed by it.

Windows Phone was fully closed, offering no personalisation options and many restrictions, including the "locking" of the phone to the newly created market for Microsoft applications. Due to the changeover, the applications available for Windows Mobile were incompatible with Windows Phone, which had led to a small number of applications available for the new operating system. However, Microsoft's problems were not over. Striving to unify the user experience, Microsoft had significantly limited the hardware used by Windows Phone. This had led to its lagging behind its rivals.

The absence of personalisation options from the operating system had turned into cloning the devices operating with it and Microsoft’s partners had very few tools with which to distinguish their phones from other manufacturers’ phones. It turned out that the first generations of smartphones were distinguished primarily by the company logo on them. This had reduced the enthusiasm of manufacturers. Here we should mention Nokia. Former No.1 among the mobile phone manufacturers it was also unprepared for the revolution in the sector. There was confusion and various development plans did not work out and, year after year, the market share of the company was shrinking.

In the end, it decided to make a bold and radical move, namely, to abandon the development of its own mobile operating system and to turn to Windows Phone. For some analysts, this was a logical move; others considered it too risky an investment and more than a few people perceived it as a plan for the acquisition of the company by Microsoft, which was quite reasonable since none other than Stephen Elop, a former employee of Microsoft, was attracted and appointed executive director of the company. The Finnish corporation had signed an exclusive agreement, offering the company more opportunities and freedom compared with other Microsoft partners. Following the subsequent developments, a few months ago, the Finns ultimately sold its mobile unit to the US software giant.

 

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