Nokia deal could help Microsoft curb Google threat in Africa

Telecoms

After its deal with Microsoft, the future of Nokia's non-Windows Phone devices has been called into question. But such devices could play a key role for Microsoft in targeting Africa, even as the continent begins to embrace smarter mobiles.

Microsoft's acquisition of Nokia's devices and services unit for €5.4bn will help the software company to head off competition from Google in the lower-end of sub-Saharan Africa's smartphone market. The transaction also puts Microsoft in a stronger position to compete in a region that is only just beginning its transition from feature phones to smart devices.

Analysts covering the African telecoms market believe that Nokia's strong carrier relationships, brand equity, and supply chain across Africa, as well as its position in Africa's dumb and feature phone segments, will be major advantages for Microsoft in the years to come.

At stake is a larger share of one of the world's fastest-growing mobile markets, where less than one in every 10 people currently has a smartphone. It's a market where low-cost Android devices from manufacturers such as Huawei and ZTE have gained enormous traction over the past three years and where BlackBerry is still a major player.

Microsoft and Nokia have both focused heavily on the African market through a range of projects in the past few years, says Steven Ambrose, Chief Executive of South Africa-based consulting firm Strategy Worx. By pooling their strengths, he says, the companies will be able to compete more effectively with Google and other rivals.

"Nokia historically has excellent relationships with the mobile operators in Africa, along with well-developed supply chain and service networks," Ambrose says. When this is coupled with a vertically integrated manufacturing process and Microsoft's software, this makes Windows Phone a stronger proposition for the African market.

For Microsoft, the benefits of driving Windows Phone adoption go beyond the smartphone market. By getting consumers used to its platform, Microsoft could put itself in a strong strategic position to capitalise on growing adoption of PCs and tablets in Africa, Duvenage says.