Microsoft's Nokia deal could benefit rival mobile device vendors, analysts say

IDG News Service – Microsoft’s plan to buy Nokia’s phone business and have a larger presence in hardware devices has so far brought little response
from PC and smartphone vendors in Asia. But the deal could end up bringing dividends to Microsoft’s long-time partners in
the region by revitalizing the Windows ecosystem, according to analysts.

Windows Phone licensee HTC is still assessing the impact of Microsoft’s US$ 7 billion acquisition of Nokia‘s mobile phone business, a spokeswoman said Tuesday.

Huawei Technologies, another licensee, said the acquisition deal would not affect its cooperation with Microsoft, while smartphone
maker ZTE also said it would continue developing Windows Phone devices while there was demand for them — and as long as the
OS remained fair and open, as with Google’s approach to buying Motorola Mobility, which makes phones running the Android OS
that Google develops.

Other Windows Phone licensees such as Samsung Electronics declined to comment.

But the U.S. software giant’s previous moves at competing in the hardware space have not always been welcomed by its partners.

Following last year’s unveiling of Microsoft’s Windows Surface tablet, Taiwanese PC maker Acer was vocal in its opposition
to the product, stating that it would disrupt the PC ecosystem. Lenovo, while less worried about the Surface product, was also opposed to Microsoft supplying hardware.

Although shipments of the Surface tablet have been weak, Microsoft’s plan to buy Nokia’s phone business signals the company
doesn’t plan to let up in hardware. The deal, which is expected to close in next year’s first quarter, will give Microsoft
access to Nokia’s design and sales teams, along with its manufacturing facilities across the world.

“The PC vendors are definitely concerned about Microsoft’s approach,” said Nicole Peng, an analyst with research firm Canalys.
“Since Microsoft launched its Surface, PC vendors have been preparing for when Microsoft will have its own hardware team.”

But Microsoft’s acquisition of Nokia’s phone business may not necessarily clash with the direction of its partners, analysts
said.

Outside of Nokia, smartphone vendors including HTC, Samsung and Huawei have all been gradually moving away from Microsoft’s
Windows Phone OS in favor of Android, said Melissa Chau, an analyst with research firm IDC. In Asia, over 90 percent of the
Windows Phone devices on the market come from Nokia, she added.

“All the shipments we’ve seen have been very small,” Chau said. “I don’t think we are going to see any huge outrage on the
smartphone side.”

The biggest fear PC vendors may have, however, is that Microsoft’s acquisition of Nokia will bring more Surface tablets to
the market, intensifying the competition with partners. Many vendors including Acer, Asustek Computer and Lenovo are releasing
new tablets and convertible PCs running Windows 8.

But analysts argue that Microsoft will likely steer clear of the PC space with its Nokia acquisition, mainly because the handset
vendor has no history of building tablets or laptops.

The IDG News Service is a Network World affiliate.

Netflash

Microsoft"s Nokia deal could benefit rival mobile device vendors, analysts say