Bottom Line: Smartphones have left this pair lagging

 
Marc Sidwell
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IT’S EASY to see why firms with so much in common are joining forces – both Nokia and Microsoft were the future once.

Yesterday, a 30 per cent bump from the good news left Nokia shares trading around €4, a long way from the glory days of May 2000, when they topped €64 each.

Microsoft meanwhile has seen its share price halve in the last 13 years. It missed the smartphone and tablet boom, then saw that trend eat into PC sales. Now Microsoft wants in, but its new Surface tablet, late to the party, just flopped, with a $900m loss.

The Windows Phone operating system has a four per cent share of the smartphone market, as it struggles to outcompete the open source power of Android.

Microsoft and Nokia together are reduced to hoping their combined smartphone market share can hit 15 per cent by 2018.

Such meagre ambition is far from the 90 per cent of desktops that still run Windows or the 35 per cent share of the mobile market Nokia had ten years ago.

Nokia licenses Windows Phone already, so tripling market share remains a challenge for the future. Instead, as well as patents and Nokia chief executive Stephen Elop, the deal’s main advantage is to boost Microsoft’s gross take on every phone sold from $10 to $40. In hard times, Ballmer is counting every penny.