NEW YORK: Microsoft should use its planned acquisition of Nokia's devices and services business to reinvent itself as a mobile-centric company, say technology communications experts.
Just weeks after Microsoft CEO Steve Ballmer said he will step down from his role within 12 months, the company made a surprise announcement that it plans to buy Finnish manufacturer Nokia's mobile unit for $7.2 billion.
The deal marks a significant move into mobile hardware for Microsoft, which has been criticized for allowing Apple, Google, and Samsung to speed ahead of it in the mobile area.
Much has also been made of the waning popularity of Nokia and Microsoft -- Nokia was, until last year, the world's largest mobile-phone manufacturer. To stymie further decline, Microsoft will have to position itself as an innovator in mobile, while deploying different strategies for developed and emerging markets, according to tech PR professionals.
“Microsoft is seen as a falling star, not a rising one,” says Martin Jones, managing partner and co-founder of March Communications. He says the Microsoft brand currently has “a desperate feel to it.”
“This is a good opportunity for Microsoft to reinvent itself as a mobile-centric, rather than a desktop, company,” he says. Jones adds that although the desktop legacy of the brand weighs heavy, Microsoft can be “reborn” through innovation in new areas of mobile, such as screens in cars.
While Microsoft's mobile business trails those of Apple and Samsung, there is still much to play for in emerging markets, where the mobile business is booming and the Nokia brand is strong.
“The developing world is where it is all going to happen – the Microsoft legacy is less strong there, so it won't hinder it as much,” says Jones. “Nokia is a good company that got blindsided by Apple. But it's got all the heritage and expertise to remain a player. It is huge in feature phones and Microsoft could help with its software… Microsoft has got enough money and oomph to do something, but instead of taking relatively soft steps, it needs to take big strides.”
Ross Sleight, chief strategy officer at mobile agency Somo, agrees that Microsoft has an opportunity in developing markets, but to achieve success, it must use a different strategy than the one it is deploying in emerging markets.
He adds that Nokia has a “great” strategy in developing markets with its range of Asha phones, which are mass-produced feature phones with a long battery life at a lower price than smartphones.
“Whether Microsoft will be running Windows or Asha, it needs to produce an entry-level smartphone in developing markets,” he contends.
In developed markets, Sleight says Microsoft should focus on its ecosystem and create a set of “killer services and apps” for a target audience to coax iPhone and Android users away.
“Microsoft needs to work out what it is to people and target an audience, as it has done with Xbox. It should not try to be everything to everybody, but something to somebody,” he says.
The enterprise market could be the audience Microsoft goes after, suggests Bob Pearson, president of W2O Group.
“Microsoft has always had a good enterprise presence, and other than BlackBerry, no one has really been a big enterprise player in mobile – there could be a real opportunity there,” he says.
While he agrees that emerging markets will be the “real battlefield” for mobile, consumer prices on devices will go down over time, leaving Microsoft to compete at the lower end of the market.
“I think Microsoft is a brand people respect, and chasing the feature-phone market is not an important strategy for it,” he says. “It should go back to its core strength, which is helping you organize what is important in a company. It isn't going to be Apple, but it could be the best organization for corporate life with mobile in the center.”
Microsoft declined comment. A representative from Nokia could not be immediately reached for comment.