Nokia and Microsoft stock both jumped in early morning trading on Monday.
The increases followed a game changing Google announcement after the company revealed it will purchase Motorola Mobility. The deal, worth $12.5 billion, will see Google “supercharge” Android software on future Motorola handsets and protect fellow Android partners against patent disputes. The news has created a mixed reaction across the blogosphere, with some questioning whether Google’s deal is simply for patents or to control the end-to-end experience of consumers. A number of Android partners, who were briefed about the deal beforehand, voiced their support for Google’s acquisition on Monday. HTC, Samsung, Sony Ericsson and LG all welcomed the news that Google is committed to defending Android and its partners.
Investors and some analysts believe that Google’s announcement could shift some Android manufacturers over to Microsoft’s Windows Phone platform. Microsoft’s stock rose by 1% in early morning trading, whilst Nokia’s rose by 11% – reflecting stock market opinion. Lee Simpson, an analyst at Jefferies International, spoke to Bloomberg on Monday. “It might start to put Microsoft into focus as an alternative platform now, which could indirectly benefit Nokia,” said Simpson. Simpson’s opinion was mirrored by Nokia who issued the following statement:
“This further reinforces our belief that opportunities for the growth of Nokia’s smartphone business will be greatest with Windows Phone. This could prove to be a massive catalyst for the Windows Phone ecosystem. Additionally, with our respective intellectual property portfolios, Nokia and Microsoft are working together to build and nurture an innovative ecosystem that benefits consumers, operators, developers and other device manufacturers.”
Nokia spokesperson, James Etheridge, also called the deal a “massive catalyst” for the Windows Phone ecosystem in an email to Bloomberg News on Monday. “The main player who can buy Nokia is Microsoft and they practically already own them,” Simpson said. “They practically took out Nokia’s smartphone strategy for nothing at the start of the year and no one else would be allowed to buy them underneath Microsoft’s nose.” Mike Walkley, an analyst for Canaccord Genuity, feels that Microsoft and Nokia are the big initial winners from the Google deal. “Windows Mobile seems more relevant than it did last night, and it seems now to have a better chance of becoming a third ecosystem,” said Walkley to Tech Trader Daily. “Microsoft and Nokia seem the big initial winners from this transaction, given that this creates a better chance for more players to support the Windows ecosystem,” Walkley added.
Monday’s announcement is backed by Android manufacturers at the outset mainly because of Google’s promise of patent protection for its operating system. However, in the long term it could see the likes of HTC and Samsung move closer to Microsoft if they question Google’s close relationship to Motorola Mobility. Google’s choice of being a licensor and a licensee will make other licensees uncomfortable in a market that appears to be Microsoft vs Apple and Google. Asymco points out the perils of licensing to your competitors, focusing on Nokia’s Symbian woes. Microsoft must be rubbing their hands together in anticipation.