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What would it take to keep Microsoft/Nokia relevant in handsets? They would have to produce a hit mobile product, not necessarily a smartphone. It could be a tablet device or something in between. But a mere "me-too" gadget probably won't get the job done, says telecommunications analyst Edward Snyder, principal of San Francisco-based Charter Equity Research.
"Microsoft needs to produce the next 'must-have' device for consumers to even take notice," Snyder argues. "That's a tall order that's not likely to occur in the near-term," and it would require a significant amount of capital to develop, he adds.
Of course, Microsoft has seldom been reticent to invest vast sums chasing markets in which it had previously whiffed. (See Internet search losses.)
But the company is undergoing a major restructuring, and the person previously responsible for the deep pockets, Chief Executive Steven Ballmer, is retiring. Will the new yet-to-be-named succeeding chief executive be expected to pump tens of millions of dollars into hardware for Windows Phone? Tough to tell. If it's departing Nokia Chief Executive Stephen Elop (author of the infamous "burning platform" memo), then perhaps such an investment might not be out of the question.
At its recent financial analyst briefing, Microsoft explained that it was making significant changes to its organizational structure. The company also strongly dismissed the idea that it should focus more on enterprise customers than consumers, even though profitability is led by the enterprise business, says technology analyst Bill Whyman of ISI Group, a research boutique. "CEO Ballmer forcefully made the case why their devices and services strategy was the right path," Whyman says.
So, the deep financial commitment to stay in the handset game indeed may be there. But for his part, Charter's Snyder contends that it could be good money chasing after bad, suggesting that Microsoft's bet on Nokia likely won't succeed. "Judging from past turnaround attempts, Nokia's handset division will probably remain a mere shadow of its former self," Snyder says.
Worse yet, Snyder envisions that the handset operations could "eventually get jettisoned by Microsoft, but only after unfruitful and extensive investment."
It wouldn't be the first time that a high-profile company was acquired by Microsoft and disappeared into the abyss.
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Posted: 2013-10-05 @ 12:32am PT
US centric view. In Europe (50% bigger than the US and similar levels of wealth) Windows Phone is 10% of the market and growing. The iPhone is much bigger in the US than anywhere else in the world, so you have a distorted view.