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Long Road Still Ahead in Microsoft-Nokia Deal

steve_stephen.jpgThe US Justice Department and Federal Trade Commission have given their blessing to the merger of Microsoft and Nokia. Now the European Commission has followed suit, all but green-lighting the deal.

But what will happen to Nokia once the merger is complete? And how will Microsoft manage its increasingly integrated chain of operating systems and devices? Perhaps we'll know more once the company picks a new CEO whose first job will be to integrate the two giants.

How Will Microsoft Change?

Just three months from the announcement of the $7.2 billion merger, Microsoft is rapidly collecting permission slips from major regulators and legal interests. Today, the European Commission's competition team signed off on the deal, citing that "the overlap of the two companies' activities in this area (mobile) is minimal and several strong rivals, such as Samsung and Apple will continue to compete with the merged entity."

With the deal now good to go, having received the approval of American regulators earlier in the week, the new entity should be ready by early 2014 to get on with the job of winning back mobile market share and driving Windows 8 adoption forward. To that end, Microsoft is already hard at work on the Windows side.

Rumors abounded last week that it will sunset Windows RT development to focus on Windows 8. The future of the desktop operating system (OS) will be closely tied into Windows Phone with Project Threshold, bringing content, apps and cloud services to desktop, mobile and Xbox One console in a unified manner (while the OSes will remain distinct). 

If Threshold succeeds, Microsoft will be one up on Apple which has to divide its development time and resources between Mac OS X and iOS, but will then have to answer to three distinct user bases with every design decision or problematic app or content issue. 

Questions to be Asked

As far as consumers are concerned, the biggest issue is what will happen to the Nokia name. There's much value in the brand as a generation of mobile users has grown up with it. If devices are branded as "Nokia powered by Microsoft" I'm sure most users could live with that. But, if Microsoft abandon's the Finnish company's name, can it rely on the Microsoft brand to sell mobiles?

The slow-to-modest uptake of Surface devices suggests not, but with quality hardware and a growing user base, will users really abandon Nokia-quality products, packing market leading cameras, excellent software features and a distinct design ethos just because of a name change?  

The deal might also impact Microsoft efforts elsewhere. This month we saw that growth of Windows 8 is still being outstripped by Windows 7 (0.05 percent vs. 0.22 percent growth according to Net Marketshare.) Are new updates and product launches now being help back to coincide with the new company? It is certainly possible, and further distractions from the merger and new boss won't help efforts of the workforce.

Are Smartphones Microsoft's Savior?

While Nokia dominates Windows Phones sales, Microsoft may also have a juggling act to keep its hardware partners onside. If there's little profit for the likes of Samsung and HTC Windows Phones, why should they keep making devices, and will that stretch to Windows tablets and others areas as Microsoft becomes a bigger hardware player?

Whatever happens, Microsoft needs to get users upgrading to the premium tier Lumia 1520 and other leading devices up from the Lumia 520 which is generating most sales. Only major pricing changes or radical differentiation can help it fight the entrenched Apple and Android masses, despite its best efforts with some stellar advertising

These and other decisions will rest with the new CEO, who the company still has to appoint. With the candidate list shrinking, if Nokia's current CEO Stephen Elop gets the job you'd think he might like to keep the name around, but if an outside like Ford's Alan Mulally gets the gig, its easy to see him trying to unify the company wherever possible. Whoever sits in the big chair, they have a mighty job on their hands. 

 
 
 
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