The changing paradigm
Along with the recent acquisition of Nokia’s smartphone business for $7.1 billion, Microsoft also announced one of the biggest internal transformation—that from a software company to a devices and services company.
But Microsoft has offered scant details about the transformation roadmap. Partners however, believe that this is an existential transformation. “For a company which for the last three decades has been a dominant player in the client-server software space with revenues of more than $60 billion from om software licenses alone, this transformation n will be existential. Its not going to happen overnight and there will be a massive internal reorganization,” infers Suresh Ramani, CEO, Techgyan, Mumbai.
Many analysts believe that the acquisition of Nokia was Microsoft’s last chance to make any impact in the mobility y market. With Android operating system steering ahead with more than 70 percent of the marketshare, iOS at 20 percent, Microsoft has managed to acquire less than 10 percent marketshare despite being in the mobile OS segment for the last 5 years. The Nokia acquisition will allow Microsoft to make a more aggressive pitch in this market, now that it has full control of the GTM.
For a company which has been a dominant player in the client-server market for the last three decades, the transformation into a devices and services company will have its own set of challenges. The Nokia acquisition however, could prove handy
“Microsoft has to make an impact in the smart device market. The PC market is shrinking and Nokia’s acquisition was Microsoft’s best bet to stay relevant in the post PC period. Over the past six months we have seen some good products being launched under the Nok Nokia Lumia brand and Microsoft’s Surface tablet tablet. With enterprise mobility gaining mom momentum Microsoft with its devices bu business can really do well,” feels Devesh A Aggarwal, CEO, Compusoft.
On the services front, Microsoft is b betting on cloud services, including Office 36 365 and Azure, which has grown 12 p percent from $2.87 billion in 2012 to $3.2 b billion in 2013. Many analysts believe that in 2014 Microsoft could look at expanding its cloud portfolio either by acquiring companies or launching new services.
Certainly 2014 will provide more clarity on how Microsoft eventually plans to make the transition from a software company to devices and services company. However one thing is clear that its not going to be easy.