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Microsoft strategy to buy Nokia will pay off, says analyst

03 September 2013, 15:26 Duncan Alfreds

Cape Town - The buyout of Nokia's mobile device business by Microsoft has changed the mobile device market and could boost the US firm's footprint in the smartphone market, an analyst has said.

"Microsoft's biggest challenge was that it did not have any real depth or expertise in supply chain management and distribution. Acquiring Nokia's mobile phone business changes this and gives them access to Nokia's mobile network operators' relationships across the globe," said Steven Ambrose, Strategy Worx CEO.

Microsoft announced that it had bought Nokia's cellphone business for $5m and it will spend an additional $2.18bn to licence the Finnish-based company's patent portfolio.

Nokia's Stephen Elop has been removed as CEO, and now serves as executive vice-president of devices and services, while board chair Risto Siilasmaa serves as interim CEO.

"For Nokia, this is an important moment of reinvention, and from a position of financial strength, we can build our next chapter," said Siilasmaa.

Market share

Nokia has been under pressure with the mass adoption of smartphones that have seen the once dominant manufacturer struggle to keep pace with competitors.

Ambrose said that the Microsoft will join Apple and Google as a "big three" mobile giants, and make it harder for smaller firms like HTC and BlackBerry to survive.

Strategy Worx predicts Microsoft will come to take at least 25% of global market share within three years as they ramp up their mobile business on the foundation acquired from Nokia.

A recent Gartner survey found that Microsoft's Windows Phone operating system had overtaken BlackBerry for third place in the mobile device ecosystem.

Gartner announced that smartphones powered by the Windows Phone OS had captured 3.3% of the market, up from 2.6% over the same three months in 2012.

BlackBerry's global share fell to 2.7% from 5.2% over the same period.

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