Analysts pan Microsoft and Nokia tie-up

 
Steve Dinneen
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NOKIA chief executive Stephen Elop defended his firm’s partnership with Microsoft yesterday after the deal sent its shares tumbling a further five per cent.

Shares in the Finnish firm have now lost a staggering 19 per cent since the deal was announced on Friday, knocking €6bn (£5bn) off its market value.

Elop said Nokia will receive “billions” in benefits from the tie-up, largely expected to be through discounted licenses to Microsoft software. Elop, who until recently worked for Microsoft, also denied suggestions he is a “Trojan horse” sent to further the US-based firm’s interests.

Analysts downgraded Nokia stock yesterday, saying it will be difficult for the firm to integrate Microsoft’s Windows Phone 7 (WP7) onto its handsets in time to reach the Christmas market.

They also warned the deal could lead to a temporary revenue vacuum, with customers unlikely to invest in Nokia’s existing Symbian platform now Elop has effectively called time on it.

Speaking last night at Mobile World Congress in Barcelona, Elop said the partnership between the two giants is “rational” and will deliver an “incredible portfolio of devices”.

Microsoft chief executive Steve Ballmer said the deal represents a “significant moment in the evolution” of mobile phones.

The two firms hope the deal will create a third “ecosystem” in the smartphone arena that can compete with Google’s fast-growing Android platform and Apple’s iOS.

Nokia was the biggest global manufacturer of both traditional and smartphones last year and its Symbian operating system was the most commonly used platform. But it saw its market share slip 7.5 per cent and Google’s Android overtook it in the fourth quarter of last year, with the Scandinavian giant struggling to find a foothold in the increasingly dominant high-end market.

UBS analyst Gareth Jenkins expects the firm to lose another seven per cent from its market share this year and said a Nokia/Microsoft platform is worth 1,800 times less than Apple’s operating system.

Ballmer also defended WP7, which has been slow to chip away at the growing dominance of Google and Apple in the high-end smartphone market.

He said 93 per cent of people were “delighted” with the platform. He went on to unveil plans to include deeper integration with services such as Facebook and Twitter.

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