Report: Microsoft’s Nokia Purchase Makes Sense In Africa

Report: Microsoft’s Nokia Purchase Makes Sense In Africa

Microsoft’s purchase of Nokia’s devices and services unit will help the software company to head off competition from Google in the lower-end of sub-Saharan Africa’s smartphone market, according to a report in ZDnet.

After its deal with Microsoft, the future of Nokia’s non-Windows Phone devices was called into question. But such devices could play a key role for Microsoft in targeting Africa, the report said.

The transaction puts Microsoft in a stronger position to compete in a region that is just beginning its transition from feature phones to smart devices.

Analysts covering the African telecommunications market believe that Nokia’s strong carrier relationships, brand equity, and supply chain across Africa, as well as its position in Africa’s dumb and feature phone segments, will be major advantages for Microsoft.

At stake is a larger share of one of the world’s fastest-growing mobile markets, where less than one in 10 people currently has a smartphone. It’s a market where low-cost Android devices from manufacturers such as Huawei and ZTE have gained enormous traction over the past three years and where BlackBerry is still a major player.

Microsoft and Nokia have both focused heavily on the African market in the past few years, said Steven Ambrose, CEO of South Africa-based consulting firm Strategy Worx. By pooling their strengths, he said, the companies will be able to compete more effectively with Google and other rivals.

Meanwhile, Chinese phone maker Huawei launched what it claims is the world’s slimmest Smartphone, Ascend P6, in Nigeria, according to a report in VenturesAfrica.

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“Nokia historically has excellent relationships with the mobile operators in Africa, along with well-developed supply chain and service networks,” Ambrose said. When this is coupled with a vertically integrated manufacturing process and Microsoft’s software, this makes Windows Phone a stronger proposition for the African market.

Ian Duvenage, business unit leader for ICT at Frost & Sullivan in South Africa, said that Nokia retains high brand equity throughout Africa, and also focused on delivering devices with good battery life and other features valued by the African market. It would make sense for Microsoft to maintain Nokia’s focus on the feature phone market while making sure it has products for lower-end users who are ready to transition to smartphones, Duvenage says.

Ambrose agrees. “The newly-acquired Nokia will continue to make feature phones and semi-smartphones for emerging markets, especially Africa,” he said, and these devices will sell well for many more years.