Table of Contents
What does the Nokia—Microsoft Transaction Offer the Market?
Shift Towards Affordability and Greater Mobility
•Growth in the smartphone market has now shifted to emerging markets that are more price sensitive and value conscious, constraining the margins of established participants such as Apple and Samsung while leveling the playing field for participants that compete on lower margins such as Huawei and other Chinese contract manufacturers.
•Even Apple has introduced the relatively cheaper iPhone 5C for emerging markets having realized that penetration at the higher end of the market has bottomed out.
•Mini versions of flagship phones are also being released—HTC One Mini, Galaxy S3/S4 Mini—in order to bring price points down for consumers, to increase market share of individual brands and improve penetration in the value-conscious segment.
Operating System of Smartphones
Android remains the dominant smartphone operating system (OS), iOS will remain the clear number two operating system as the expected launch of a lower-cost iPhone will open up a wider addressable market. Windows Phone will solidify its position as the number three OS with incremental share gains in the future.
The Future for the NOKIA—Microsoft Combine
•In this context, it is interesting to analyze the acquisition of Nokia by Microsoft for $xx billion.
•Microsoft will pay $xx billion to “substantially” acquire Nokia’s Devices & Services business and $xx billion to license Nokia’s patent portfolio non-exclusively for a period of xxyears.
•Microsoft will also separately license Nokia’s HERE mapping services for a period of four years while also providing Nokia with $xx billion worth of convertible bonds.
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