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Microsoft Buys Nokia Devices For A New Shot At The Smartphone Market

Nokia Lumia Windows phone. microsoft
Flickr Photo/Vernon Chan (CC BY 2.0)/

Microsoft’s $7 billion purchase of Nokia’s mobile device business is an important step toward gaining ground in the worldwide smartphone market, analysts say.

But bigger challenges await as the company works to get consumers to love the Windows Phone.

The purchase gives Microsoft control of a quality device maker. It also prevents Nokia from abandoning the Windows phone next year, when its contract to make those phones expires. And the deal brings Nokia's now-former CEO, Stephen Elop, back to Microsoft as the leader of the devices team.

Analysts say all this looks good but questions hang in the air. Al Hilwa is an analyst at IDC in Redmond. "Will consumers adopt Windows phone? Will Microsoft reach critical mass?  They’ve been making inroads but I would say they still have a lot of work to do," he said.

Several analysts said Microsoft and Elop already understand they have a problem selling mobile phones.  That doesn’t mean they have a solution. What they do have is an opportunity. Sid Parakh, a technology analyst at McAdams Wright Ragen, said the mobile carriers don’t want a market dominated by only two players. But consumers seem to be married to one or the other.

"Apple and Google have both established such strong market positions that a third player hasn’t been able to penetrate the market," Parakh said.

But Microsoft’s strong operating system, and the continuity it can offer from desktop to mobile device are real advantages, said Rob Sanfilippo, research vice president at Directions on Microsoft. "The company has all the pieces," he said. "It now just has to put the puzzle together and go out there and achieve success."