Tomahawk, WI 10/15/2013 (BasicsMedia) – Microsoft Corporation (NASDAQ:MSFT) boasts of Windows as its iconic product. No other product has brought in a lot of revenue to MSFT more than Windows. Nevertheless, due to the declining sales of PCs, MSFT has to look at other products it can develop in order to compensate the lost revenue. MSFT recently deemed it fitting to acquire some of Nokia’s phone hardware. The company is to pay around $7.2 billion to Nokia to get its devices and services licenses as well as businesses. Although this is a good and strategic move, is the action by MSFT justified?

 Microsoft Corporation’s Acquisition of Nokia is a Strategic for Business

 The recent acquisition of some of Nokia’s businesses will help MSFT achieve its goals where Windows Phone is concerned. Apple Inc and Google Inc are the two most dominant players where the Smartphone market is concerned. Therefore, for the most part, I think MSFT’s Windows Phone will play catch-up to the products made by Apple Inc and Google Inc. MSFT has to come up with better products than those made by its competitors if it wants to overtake them. If its products are low quality, the company will not outperform Apple and Google.

 Recent results indicate that MSFT’s Windows Phone has passed BlackBerry in terms of popularity. The Windows Phone is now the third option behind Apple and Google phones. Although it has overtaken BlackBerry, I would advice against reading too much into this based on the struggles the latter is going through. Google’s Android dominates this industry with its 79.0% market share, followed by iOS, which has 14.2% of the market. MSFT comes in the third position where it enjoys 3.3% share of the market. BlackBerry takes the fourth slot with 2.7%.

 I think MSFT has gained a lot from its acquisition of Nokia. The deal between these two companies has helped Windows Phone move up the list to occupy the third position in terms of share of the market. MSFT has sold more than 7.4 million Windows Phone gadgets thus far in 2013. If there is one major challenge that MSFT faces, it is the fact that it is not the only manufacture of Windows-based phone. It now has to compete not only with Google and Apple, but also with other companies that are manufacturing products of great benefit to MSFT.

 Are Microsoft’s Licensees Prepared to Compete with its Window Phone?

 It is doubtable whether licensees making phones, which operate using the Windows OS, are prepared to compete directly with MSFT. They need to find some sort of advantage and a competitive edge to continue with this arrangement between them and MSFT. I still think that MSFT will find a solution to this challenge. Google recently acquired Motorola Mobility and this has not stopped its Android from being the market leader in this industry. Samsung is still the world’s leading handset maker, and there is a lot MSFT can learn from these scenarios.

 I have no issue with the direction MSFT has taken. It has every right to diversify into other markets and industries to help shore up its value now that PC sales are on the decline.

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