Microsoft-Nokia may never reach the market share highs that Nokia saw in India-it was 56% in 2008-but the merged entity stands a good chance of the fall (the share is now down to 27%) and making gains in the mid and upper segments of the mobile phone market.
Most analysts don't think Microsoft will bother about the low-end of the feature phone segment, where margins are very low and local players like Micromax and Karbonn have proved too competitive for Nokia. This market remains big in India, and so long as it remains big and Microsoft does not play significantly in it, the company's share in the overall market will stay low.
The big opportunity that Microsoft perhaps sees is in the mid- and upper-end, where it has the Asha and the Windows-based Lumia brands. Manasi Yadav, senior market analyst with research firm IDC India, believes Microsoft will bring greater focus to the mid segment in the short run. "Access to Nokia's patents and OS will help it to create powerful devices in the market. Going forward, we will see more launches in the sub-Rs 10,000 market that will lift volumes. Nokia has strong brand equity in feature phones and since Microsoft has inherited strong legacy from Nokia, they will look at new launches in that price point," she said. IDC categorizes Asha phones, priced at Rs 4,000-6,000, as feature phones, though some call them low-end smartphones.
Soma Sundaram, founder of mobile payments platform iKaaz, said Asha was a huge win for Microsoft, "From a growth with profitability perspective, the Asha and higher-end smartphone segments are what Microsoft will likely focus on."
Yadav thinks Microsoft will take a longer time to build its smartphone strategy because Lumia is still a nascent platform compared to Android.
Anshul Gupta, principal research analyst in Gartner, said since the Nokia deal puts Microsoft closer to the customer-as it now controls both hardware and software-they would be in a better position to understand what the market wants. "This deal is good for the Windows ecosystem and MS should be able to manage device upgrades easily," he said. But Sridhar Pai, CEO of telecom research company Tonse Telecom, said Microsoft would find the going tough. "They are late entrants into a market dominated by Android phones. They have a set of adaptive issues and they have to execute their strategy faster to accelerate their capabilities," he said.