Microsoft's purchase of Nokia signals wider market consolidation
By kateoflaherty, Sep 3 2013 09:11AM
The news that Nokia will be bought by Microsoft for $7.2bn signals the end of an era. But it's hardly a surprise; and it becomes part of much wider consolidation in a complex and sometimes fragmented mobile market consisting of multiple operating systems and manufacturers.
What is surprising is the speed of the market's transformation, which can be traced back just seven years. Hark back to 2006/2007; each manufacturer had carved out a niche. Consumers had a Motorola Razr in their back pocket; or a Nokia; Samsung and Sony Ericsson were making decent handsets. Businessmen had a BlackBerry.
Then came the iPhone in 2007. Smartphones to rival Apple's device came along and with them, multiple operating systems and new manufacturers. HTC stormed the market with Android devices, while emerging players such as Huawei and ZTE started making their mark.
And with this deluge of smartphones came multiple operating systems, the biggest revolution being Google's Android, which immediately became a cheaper and more flexible alternative to Apple's iOS. Samsung's share grew as it jumped on the Android bandwagon. Sony Ericsson trundled along until it was eventually bought out by Sony.
And where was Nokia in all this? Although it was still selling the most smartphones by volume until recently, it was quickly losing traction in the consumer space, focussing instead on emerging markets and churning out boring feature phones.
In 2011 came the news that Nokia and Microsoft - which was struggling for share itself in the mobile market - would partner. The phrase, "two turkeys don't make an eagle" was uttered by execs. Why didn't Nokia go with Android?, the industry asked. Google later bought Nokia's rival Motorola.
But despite criticism, slowly, the Microsoft/Nokia partnership was becoming a success. Just this week, it emerged that Nokia's Lumia smartphones had boosted Microsoft's share of the operating systems market to nearly 10% in Europe.
Then came the news of Nokia's sale; it was inevitable. And as consolidation happens fast, the mobile market is changing again. There is only room for a certain number of players, signalling that it's only a matter of time before Blackberry - and others - are bought, too.