Mi­crosoft is re­struc­tur­ing, with mas­sive lay­offs afoot, mostly from its newly ac­quired Nokia sub­sidiary. The im­pact will be mas­sive for the fea­ture phone mar­ket and big op­por­tu­ni­ties for other man­u­fac­tur­ers to fill the gap.

Finweek English Edition - - TECHNOLOGY -

Mi­crosoft’s new CEO, Satya Nadella, an­nounced a re­struc­tur­ing of the com­pany last week as part of his ‘re­fo­cus­ing’ Mi­crosoft on what he says is the com­pany’s core – pro­duc­tiv­ity soft­ware. Part of the move will see Mi­crosoft killing off Nokia’s Sym­bian fea­ture phone range along with its budget smart­phone prod­ucts – the Nokia Asha a nd X r a nges. Whether or not this is the right move for Mi­crosoft is de­bat­able, but it will cer­tainly cre­ate a crevice in emerg­ing mar­kets where fea­ture phones are king.

There are es­ti­mated t o be a r ound 5 bn mo­bile phones in the world to­day, of which only 1bn are smart­phones. The r e s t are fea­ture phones that still ac­count for 65% of the mar­ket in Africa where their pop­u­lar­ity has noth­ing to do with op­er­at­ing sys­tems.

Fea­ture phones are easi ly avail­able for less than R100 in South Africa, for one. They have bat­ter­ies that last for up to three weeks. They can be bought al­most any­where and are treated as dis­pos­able. They won’t be go­ing away any time soon. If Mi­crosoft and Nokia won’t be sell­ing them, then some­one else will.

Don’t let the small price tag fool you eit her. Man­u­fac­tur­ers make de­cent mar­gins on fea­ture phones. The wildly pop­u­lar Nokia 105, for ex­am­ple, earns the com­pany about the same mar­gin as its higher-end Lu­mia de­vices. The Asha range has also been in­creas­ingly suc­cess­ful i n mar­kets such as Kenya a nd I ndia where Nokia continues to sell more fea­ture phones than any other man­u­fac­turer. Asha of­fers things like dual-SIM f unct i ona l i t y a nd smart­phone-like apps on a plat­form that is af­ford­able and meets some of the cri­te­ria, men­tioned above, that make fea­ture phones pop­u­lar.

Nadella’s move away f rom this seg­ment is a bold one and has been greeted pos­i­tively by in­vestors. It is high time to make tough calls to re­fo­cus the busi­ness, and an in­ter­ven­tion is long over­due. It does mean say­ing good­bye to a mas­sive seg­ment of the mo­bile mar­ket, how­ever, where Nokia is still a leader. Who­ever tack­les the void will be richly re­warded.

Satya Nadella

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