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

Michael Kan | Sept. 4, 2013
Microsoft's moves into the hardware market have previously drawn opposition from its PC partners, but could help them.

The Acer Iconia W3, the world's first 8-inch Windows tablet, unveiled at Computex
The Acer Iconia W3, the world's first 8-inch Windows tablet, unveiled at Computex

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.


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