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Microsoft's buyout of Nokia may herald the arrival of a more converged world.
For two technology titans, the prospect of one's purchase of the other being characterised as a lifeline for both, or as a last-ditch effort at relevance in the new global tech market, must be particularly galling. Yet, that was precisely how news of Microsoft's $7.2 billion buyout of Nokia's cellphone business and crucially, its patents, was reported. Given that Microsoft's Windows software still dominates the PC market, and Nokia remains one of the world's largest phone manufacturers, this would appear to be a misrepresentation. But the fact is that both Microsoft and Nokia have become increasingly sidelined as rivals Apple and Google have stolen a march in mobile computing.
The purchase makes sense for Microsoft since Nokia is the largest manufacturer of cellphones built on its Windows mobile operating system. Nokia hitched its wagon to Windows three years ago with limited success. Windows Phone commands a minuscule 3.3 per cent share of the smartphone market, a distant third. By buying a handset maker, Microsoft intends to exert a greater degree of control over a user's hardware and software experiences, streamlining them to make the interaction more seamless. In so doing, Microsoft — and Google before it, with its purchase of Motorola — has ushered in an era of vertical integration in smartphones, where form and function blend together and distinctions between them evaporate.
Building mobile ecosystems by owning and operating the hardware and software as well as the services around a device requires company-wide synchronisation in engineering, programming and marketing — a tall ask. And the irony is that if the integration of hardware and software becomes an industry standard, as appears to be the case, it could lead to a situation where this type of convergence is commoditised, and the tightness of the fit becomes much less important than the network carrying the data.
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