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What Microsoft-Nokia Deal Means To Phone Manufacturing Companies Like Samsung?

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Yesterday, most of us woke up to the news that was almost expected from the first day since Microsoft and Nokia got together. Finally, Microsoft has purchased Nokia for $7.18 billion which is frankly a little downer for once great company. In comparison, Skype was valued higher at $8.5 billion and it is just piece of software. Nokia has a hardware division, patents and mapping service. All this belongs to Microsoft now.

If anyone of you might have noticed by now, there are three major companies in the arena which make the software and all three now have a well-established hardware (read mobile making) division.

Samsung Who

Apple of course created its own division while Google and Microsoft acquired Motorola and Nokia respectively. Strangely, all three have completely separate reasons for getting the personal hardware stream.

Where Apple traditionally prefers to create its own hardware and software, Google’s buyout was primarily for the patents and the hardware section was probably an afterthought if not a liability to them. Google has time and again said that they have no interest in interfering in Motorola’s hardware division and companies have nothing to worry about in this regard. While it may not be completely true, Google has kept the two things separate up till now.

Microsoft has gone for the hardware. It has given nearly $5 billion for the hardware section whereas less than $2.5 billion for patents and mapping services. Mind you, it would not change the type of phone that is coming of Nokia’s stable radically. Microsoft was already dictating a lot as far as making of the phones was concerned. It is just an agreement of marriage for two people who were in a live-in relationship.

These three stalwarts however create a divide between them and the other companies, especially Samsung, HTC, ZTE and other mobile making companies that have found home in Android.

Samsung on the other has been working on its own software- Tizen for a long time now (if we include all the previous iterations as well) and seems to be going nowhere with it. Their previous foray in Mobile OS with Bada was a failure as well. This is not good news for them.

With Microsoft-Nokia deal, Google will be under pressure and it will feel more comfortable with a company it has complete control on than one that is equally big and can dictate its own terms.

I believe it’s time for Samsung, HTC, ZTE and other companies to look at other OSes like Mozilla’s OS and other such systems. They might not find the need for these OSes in the coming 3-4 years but when the need will come, the downfall for such companies can be as swift as Nokia’s.

*People wondering why I have not included Blackberry in the discussion is because I don’t think it will be anything more than a niche player in the market anymore.

  1. Yash says

    Android needs Samsung and Samsung needs Android. Both have supported each other in becoming number one in their respective fields. Besides Samsung has complete phone manufacturing line in house, they can take any damn OS and make it number one but why would they? They make some of the finest hardware and they would want the best mobile OS in the market and that is Android. So Samsung has nothing to worry about, it’s the fringe players like HTC and Sony and Blackberry who should be worried.

    1. Kunal Prakash says

      @Yash: Nokia once had a complete manufacturing line in house and were number 1 with even more users than Samsung currently has. Blackberry once was Business phones.

      All it takes is a couple of bad years for a company to turn into a rotten fruit. Besides, Microsoft’s share is rising steadily in the OS market (especially in Europe). It is a very slow rise but a rise nevertheless.

      Moto X has an always on Google Now. Complacency will hurt Samsung even now and OS making companies getting hardware segments as well, this would be a problem in future for Samsung.

      1. Girish says

        Nokia was reluctant to change to Android and chose to stick with Symbian (sinking ship!) which was there top mistake. Had Nokia started shipping phones with Android OS on it, nobody would even thought of trying Samsung/HTC in asia-pacific.

        1. Kunal Prakash says

          Completely true! Nokia made mistakes. It is not the first company to do so. It is not even the first Phone manufacturing company to do so. Even Motorola was bought after all (and it is the company that made the first mobile phone).

          HTC made the first Android phone and it is fighting for nth place now.

          Companies make mistakes all the time and with consolidation of OS and hardware going on Samsung won’t even get as much time Nokia got.

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