Will Microsoft's acquisition affect the Smartphone Market in India?

Microsoft took over Nokia, one of India's leading consumer product company. Microsoft being a smaller company as compared to Nokia in India, is facing a tough time to actually act like owners.

The result of this deal would probably be a fall in the prices of the smartphones. This is quite probable because Microsoft would obviously reduce or remove the high charges for licensing its mobile operating system. Hence there is a possibility of getting low-priced Lumia phones very soon.

A low-priced Lumia would probably better Nokia's situation in the market. Earlier, seven out of ten phones sold in India were by Nokia. In the financial year 2012-13, however they lost this position to Samsung. Now Samsung is the market leader with 31.5% share. Nokia has slid down to 27.2% after its revenue fell by 18% to Rs.9.78 crores.

Improvement can happen with Nokia, only if concentration is shifted to the smartphone market. However that won't be much of an advantage to Microsoft in the short term, though it might work out in the long term. It would take Microsoft a lot of hard work to make a smartphone market work in the short term because Nokia has built the feature phone segment with great care. About 60-70% of the revenue comes from Nokia's new segment of feature phone known as Asha. The reason for high revenues from this feature phone is because of its low price and features almost close to a smart phone.

Microsoft however seems likely to maintain Nokia's feature phone segment till the market phases out and starts accepting smartphone more readily. This deal wont affect Microsoft much, but might have a huge impact on Nokia's Chennai factory which manufactures Asha phones.

The prospect of Microsoft taking over Nokia and running successfully seems a bleak possibility. Microsoft being a smaller company in India as compared to Nokia, would need a lot of compromises and convincing to reach that position, build by Nokia over the years.