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Microsoft’s Nokia buy may signal the end of Windows Phone as we know it

September 4th, 2013 at 3:20 PM
Microsoft Nokia Merger Windows Phone Analysis

As we recently observed, it’s not clear whether Microsoft’s longtime software licensing business model can will work in the mobile world, especially when Google is letting smartphone vendors use Android on their devices free of charge. Thus, it seems logical that the company would consider changing its mobile software business plan to look either more like Google’s free-to-use model or more like Apple’s tightly controlled model that seamlessly integrates hardware and software.

With the release of its own Surface tablet and with the just-announced merger with Nokia on the horizon, it seems that Microsoft is leaning much more toward the Apple model. Slate’s Farhad Manjoo has a smart take on why Microsoft’s decision to buy Nokia is a seismic shift for the company and why it may portend the end of the company’s efforts to rely on third-party manufacturers to spread Windows across mobile devices.

“This is the antithesis of the company’s Windows strategy,” Manjoo writes. “Though Microsoft insists otherwise, when this deal is done, the thing sold as Windows won’t be what it’s always been — it won’t be software that that runs on lots of companies’ hardware, a platform to unite disparate manufacturers’ devices. Instead, Windows will be much like Apple’s operating systems, iOS and Mac OS. Windows will be proprietary software attached to proprietary hardware — Microsoft’s code running on Microsoft’s devices.”

Manjoo thinks that Microsoft’s calculations in this decision are very straightforward: It doesn’t want to rely on OEMs churning out third-rate hardware with its software at a time when style and design are more important than ever with mobile devices. So even though consumers didn’t mind buying bulky and unattractive PCs in the past, things change when it comes to mobile devices that they’re carrying around with you wherever they go.

GigaOM’s Kevin Tofel has a similar take to Manjoo’s and says that the merger with Nokia will make other vendors even less likely to pay money to license out Windows Phone and Windows RT for their flagship smartphones and tablets. Given that vendors have been fleeing Windows RT left and right and that support for Windows Phone 8 among non-Nokia vendors has always been tepid, Microsoft may have figured that it really had nothing to lose by getting more deeply involved in the hardware business.

“The ultimate point here is that Microsoft is doing exactly what it said when the Ballmer retirement was announced: It’s becoming a devices and services company,” writes Tofel. “And because of that, the days of licensing Microsoft software — at least in the case of Windows Phone and Windows RT — are coming to a close.”

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