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May 10, 2011

Microsoft's Skype Deal Comes in the Wake of Nokia Partnership

Executive Editor, TMC

Microsoft’s planned acquisition of Skype – announced today – is the second major pairing it has announced this year. The software giant opened 2011 by announcing an alliance with mobile phone manufacturer Nokia. These two companies both bring to the table global reach and distribution, big names and many other assets.

The Microsoft-Nokia relationship involves the two companies working together to create mobile products and services. However, that pairing goes beyond that standard phrase. Surprisingly, part of the deal also involves Nokia adopting Windows Phone as its principal smartphone strategy.

But the partnership goes further still. For example, Nokia will help Microsoft expand the Windows Phone to more geographies, market segments and price points as part of the relationship. Its operator billing agreements are supposed to make it easier for consumers to buy Nokia Windows Phone services in countries where credit cards are not commonly used. Nokia Maps, its search services and devices will be integrated with Bing and Microsoft adCenter. Microsoft development tools will be leveraged to create applications for Nokia Windows Phones. And the companies will combine their app stores. (More than 30,000 developers already have registered on the Mobile mobile app store.).

At a joint news conference announcing the partnership earlier this year Microsoft’s Steve Ballmer said: “Ecosystems thrive when fueled by speed, innovation and scale. The partnership announced today provides incredible scale, vast expertise in hardware and software innovation and a proven ability to execute.”

It’s unclear how the new Skype acquisition could impact the Nokia relationship, however, Microsoft’s proposed acquisition of Skype is a game changer, according to Sujit Jha, director of consulting firm Altman Vilandrie & Co., who says that this new deal will help the software giant better compete with Apple.

“Skype instantly makes Microsoft a significant mobile player, just months after it looked like it was in danger of becoming marginalized in the Mobile Internet era,” says Jha. “This move, coupled with last winter’s partnership with Nokia, should turn the momentum on its head and deliver Microsoft a significant new subscriber base, especially among consumers. 

“In addition, this deal could fundamentally change Microsoft’s position in home and mobile device markets and, over the longer term, enable Microsoft to play a key role in the way people communicate across multiple vehicles like voice, video, text, social media, and more,” Jha adds.

Edited by Juliana Kenny
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