3 Steps That Microsoft Needs Take To Win In Africa With Its Nokia Acquisition
Its hardly news now that Microsoft dropped a relatively modest US$ 7.2 Billion to acquire Nokia’s handset and software services business as well as some patents and mapping technology. I could have told you a year ago that this was probably inevitable when you consider just how invested Microsoft was already in re-making Nokia into a credible smartphone contender, albeit a few years late. The results are already evident given that Microsoft Windows Phone devices now outsell BlackBerries on a global basis.
So far, the Microsoft and Nokia partnership has yielded a decent number of Windows Phone devices which are actually quite impressive. However, in terms of global marketshare, Windows Phone is a distant third to the duopoly of Google’s Android and Apple’s iOS. Indeed, even in Africa, its become clear that inexpensive Android phones are now costing even less than some of Nokia’s feature phones. Its hard to imagine that just a few short years ago Nokia was the de facto mobile device for a majority of the planet.
So, going forward, much has been said about the acquisition of Nokia’s handset and software services business by Microsoft. However, the bigger question is how will this pan out for Microsoft in Africa? For sure, Nokia still sells a massive number of entry-level Symbian feature phones here but consumers and businesses alike are increasingly demanding smartphones that enable them to do so much more at really low prices. Therefore, a bigger challenge for Microsoft is how to ensure that Windows Phone becomes the “go to” mobile ecosystem in Africa when Android seems to be winning all the smartphone marketshare. In my view, the following are the 3 immediate steps that Microsoft needs to take with its Nokia acquisition(s) to win in Africa:
- Launch Windows Phone devices that sell for as little as US$ 50.00 – Yes. I know. This is a long shot but given the massive resources that the combined Microsoft-Nokia has available it should be able to launch really inexpensive Windows Phone devices in Africa. Its a no-brainer really when I can go to any mobile shop in Nairobi and buy a half decent dual SIM Android Device for around US$ 65.00. Microsoft needs to consider heavily subsidising such low-cost Windows Phone devices across Africa if it has any chance of gaining widespread adoption and achieving the sort of critical mass that Android is already enjoying continent-wide. Currently, the least expensive Windows Phone devices in Africa cost around US$ 200.00 which is far too expensive for the majority of Africans. These devices also need to be able to go head to head with comparable Android devices in terms of features and functionalities, and even be considerably better. The Chinese OEMs are already winning this game with Android so its really a do or die move for Microsoft.
- Make it super easy for current Nokia feature phone users in Africa to “switch” to become Microsoft smartphone users – Right now your average consumer in Africa with around US$ 100.00 to spare on a smartphone probably has no alternative but to buy an Android device. That being said, since Nokia never made the bold move of having an Android range of devices this means that OEMs like Samsung, Huawei, ZTE, Tecno, Mi-Fone and Tecno are winning this market hand over fist. Its a market where price and features rule. However, Nokia has been consistently launching more and more “advanced” feature phones from its Asha range which do a decent job of mimicking smartphone capabilities. This is obviously a short-term strategy that needs to be put to rest as soon as possible. Microsoft needs to use its newly acquired Nokia clout to create incentives for its feature phone users in Africa to switch to Windows Phone smartphones. Africans will need really compelling reasons to consider Microsoft over Android smartphones.
- Develop exclusive and lucrative strategic partnerships with premium African content partners and mobile developers to drive adoption – The simple reason why the Android and iOS mobile ecosystems are so well entrenched is due to the fact they have an abundance of really cool content. The majority of mobile apps that are launched globally these days happen on this duopoly and that has consumers locked-in. This will continue to be the case as mobile content becomes increasingly connected to the cloud so as to create truly contextual mobile experiences such as Google Now already does. Microsoft has already done a commendable job getting mobile developers globally to build mobile apps for its Windows Phone ecosystem but it pales in comparison to the duopoly. Therefore, once again, Microsoft needs to give incentives and offer the right sort of enabling scenarios that would encourage African content partners to build for its mobile ecosystem. This will not be easy even as there are already impressive efforts underway across the continent. Ultimately, content is the driver of mobile ecosystem adoption.
Step No. 1 is unlikely given that they have stated that through the acquisition they intend to raise their gross margin per device from US$10 (based on current licensing) to over US$40 (through the sale of their own hardware) [See http://www.microsoft.com/en-us/news/download/press/2013/StrategicRationale.pdf%5D. At the end of the day even Microsoft has to meet the obligations of its shareholders.
It’s very unlikely to produce a window phone at $50. and here’s why;
Windows Phone OS is an operating system designed from the ground up to run on high-end hardware specs like iOS. As such, Microsoft has been imposing strict hardware guidelines for its device partners to produce a phone that will deliver the sort of user experience that makes any windows phone a suitable contender against high-end Androids and the mighty iPhone.
So far Microsoft’s attempts to produce a medium-range (not even low-end) smartphone is the Huawei Ascend W1 which was a result of its 4Afrika campaign designed to usher out devices for the African market. My personal experience with it as a phone reviewer with the TechPost(www.techpost.ug) resounds a device running an OS that overwhelms the underlying hardware.
Finally, the chiness vendors know the African market far much better than either Nokia or Microsoft. While, their products leave alot to be desired, they’re being used by millions of mobile users on the African market. They beat Nokia/Microsoft in both price and features most appealing to the African mobile subscriber.
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