Words: 1851
Economic motive Window Phone is gaining a growth in market share. Microsoft is the Window Phone operating system provider in the market which licenses it to Window Phone hardware maker like Samsung, ETC and Hawaii. By acquisition to Monika by Microsoft, vertical Integration between software and hardware companies will take place to assure of dependable source of supply of each other. Microsoft which owns Window Phone operating system would need a hardware manufacturing company to manufacture Window Phones to compete better with Apple’s ISO and Goggles Android.
Microsoft as recently started a shift moving to manufacturing Its own hardware for Surface tablet but reported losses due to high costing and inefficient management. Monika has its expertise on hardware design which can help Microsoft to gain more market share in the smartened industry. Growth motive MEMO Is Original Equipment Manufacture which means company that manufactures its own products. With this acquisition, Microsoft can make a transformation beyond software and PC’s. Monika has more than 80% of its production volume for Window Phone. Monika Device and Services division can bring many key capabilities into
Microsoft. For example, great device design and engineering, dilutions and sales, globally scaled supply chain, mature operational processes and systems, operator sales and support and Window Phone which can help Microsoft to achieve scale of economic. Moreover, Microsoft started to have a hardware shift by manufacturing surface tablets with Its own hardware. Microsoft can operate Its own MEMO for Window Phone with the least friction by acquisition of Monika because it can save up the transaction cost of opening a new hardware manufacturing division.
Instead of joking for window phone makers for its SO, Microsoft can now have its own phone manufacturer and so. Synergy move Intellectual property is important element In smart devices business. Ionians portfolio has approximately 30000 utility patents and patent applications. These two portfolios is relevant to wireless connectivity which provide huge value to Microsoft existing PC’s and tablets business by this acquisition. Monika also assign its existing license with Qualm and the right under agreements with IBM, Motorola Mobility and Motorola Solutions to Microsoft.
Microsoft can combine the new Monika license and these assignments with existing patent agreement with Samsung, Apple, LEG, Nortek, Kodak and other at no additional cost. At this point, Microsoft can have the most cost effective patent arrangement for smart devices. This acquisition also Included a strong execution plan which has brought a team of Monika Into Microsoft to Devices and Services division. This will help in better supply chain management, R of devices and marketing management. 2.
How these motives can serve Microsoft interest ‘Offs 10 accelerate ten wallow phone snare In ten market Under the strategic partnership between Monika and Microsoft in year 2011, Monika had adopted Microsoft’s Window Phone operating system into its principal smartened strategy to replace Simian and Omega. Hence, Monika came out with Monika Alumina series to compete with Apple’s ISO and Google’s Android. According to International Data Corporation (DC)’s number, Window Phone shipment grew from 4. 9 million in the 2nd quarter of 2012 to 8. 7 million in the same quarter for 2013.
Based on recent smartened sales data from Kanata Warplane Compete for 3 months, Window Phone is seeing market share gains and we believe it could grow even better in the true. The acquisition could accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies and unified branding and marketing of both companies. The Joining of Monika key leaders like Monika CEO, Stephen Elope and the combination of research, manufacturing, and marketing efficiencies will let it turn out the best possible version of Windows Phone.
With the slowing growth in PC market and tablet, this would increase competitive advantages of window phone with better features and performance of device to compete better n the market in order to increase market share of window phone. Vertical integration between hardware and software The integration of hardware and software can bring a significant impact to both phone vendor’s companies and software providers. From my study, there are 2 similar cases that can be applied. First prove would be Apple Company which controls its own ISO closed operating system and hardware manufacturing.
This has been a success story of such integration. In mid-2011, Google announced the acquisition of Motorola Mobility where Google is great at its Android Software while Motorola is great at devices. The combination makes sense and has threaten the market about the possible independence of Android Software. But eventually nothing happened and recently Google is selling Motorola. Monika was once the largest mobile phone manufacturer while Microsoft licenses its operating system to other window phone vendors like Samsung, ETC, and Hawaii.
By this acquisition, Microsoft can save up the transaction cost to have a mobile phone manufacturer division. Microsoft can then control both hardware and software of the value chain to let Window Phone to create a new ecosystem for mobile phone industry. Growth motive to strengthen overall opportunity beyond SO and PC By this acquisition, Microsoft acquires the whole devices and services division. Monika was once the world largest mobile phone manufacturer. It has expertise in hardware design and Monika Map. Microsoft will have the opportunity to grow MEMO opportunity in manufacturing mobile phone especially Window Phone.
The success of Window Phone could help Microsoft to expand outside their business category in slow growing of PC and tablet market and the era when everything goes to smartened. On the other hand, Microsoft mapping service is also a crucial element to be used to compete with Google’s map. Microsoft has the opportunity now to provide Ionians mapping data services to customers through this acquisition which matches with the belief of Microsoft that the success of Window Phone could eventually help in success AT e an PC’s. Winery motive In addition to innovation and strength in phones at all price points, Monika brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution. Synergy results in economies of scales and increased revenue will take place. By acquisition of Monika, Microsoft can eliminate some duplicated costs. Monika as a MEMO, could manufacture good quality mobile phones cost effectively.
In this era where everything goes to smart phone, acquisition of Monika let Microsoft produce smart phone with great R team and technology available. By acquire the license of Monika Ash, Microsoft can enter the emerging markets by offering low cost mobile phone. Microsoft could also use Monika mapping service to improve its maps APS to better compete with Google Map. Microsoft’s Being search engine already offers mapping services such as public transportation routes. Microsoft gets the flexibility to integrate with other experiences.
For example, Ionians mapping services can be integrated into other Microsoft products. “Spatial” imagery and location services, and mapping, are “essential to integrate for mobile,” Microsoft said. 3. Obstacles faced by Microsoft in this acquisition Legal hurdle in Asia The main obstacle face by Microsoft is about the legal hurdles in Asia even though Monika said it expects to close the deal in April, 2014. This legal hurdle might delay Microsoft’s acquisition. Monika is involved in a major tax dispute in India.
Tamil Naiad’s tax department sent a 300 million Euro sales tax bill to Monika, alleging that handsets manufactured in its plant in the Southern Indian, city of Achaean were not exported but selling domestically in India. This factory is among Ionians biggest phone-making factories. India government freeze Ionians asset in India and this had banned from selling the Achaean plant to Microsoft. But, Monika strives to get this stay of transfer lifted via the Delhi High Court. Organization restructuring The purchase of Ionians devices and services division certainly will bring challenge to organization restructuring.
There will be a logistic challenge for Microsoft to bring 32000 employees under Microsoft’s roof. Employees with less skill in manufacturing would be vulnerable and may face layoffs. The way to restructure the organization of setting future strategic goal is a big challenge for Microsoft in this acquisition. Moreover, Stephen Babbler left the Job as Microsoft CEO. Stay Mandela has been officially as the new CEO of the company who might face some challenges whether he as the ability to revive the weak sales of Monika and disappearing market share in mobile industry.
Disagreement and negative feedback towards Window Phone Another problem face by Microsoft is about the negative feedback and disagreement towards Wallow phone. It Is little Lot late to Drilling evolves Into a Crowder mole market which requires fast update and release cycle to ignite the interest of consumer towards Window Phone. Microsoft would need to take more energy to gain the share back to compete with Apple’s ‘phone and Google’s open sourced operating yester, Android because the consumer loyalty is already set. Additionally, it is still a question whether consumers are interested in Window Phone.
Microsoft should have taken progress quickly. Last but not least, for those who are using phones of Alumina series, the new Windows could not be run on it. This is the reason why the sales of this series of phone are not good. Consumers will hold on until the new phone can use Windows and could be updated to newer version on the same phone. Microsoft should have done something to overcome this obstacle that bring serious impact on financial performance. 4. Opinion about this acquisition From my study about Microsoft’s acquisition of Monika, I think it is necessary do it because both of the companies are dependable.
They need each other to survive in the market because both companies have their strengths and weaknesses. For Monika, it has been facing some financial problem. It reported losses in sales and revenue. It might not making money from selling smart phone. Even though Window Phone seems to have the opportunity to grow in smart phone market, it is difficult for Monika to get fund to develop it. By this acquisition, Monika can generate more income y its patents and technology without losing money on devices and services division.
When Monika don’t have enough fund to support the growth of Window Phone, Microsoft with enough money to expand its business category into mobile industry by acquiring Monika. Microsoft also can also grow many business opportunities like MEMO opportunities and has its own mobile phone hardware division. Monika bringing its distribution reach to Microsoft, the amount of money Microsoft can pump into Monika, and the fact that Microsoft now owns Ionians extensive patent portfolio, which could e Microsoft going after its rivals in other ways.
Moreover, there is long term value creation by this acquisition. Of course, we could also list many risks that both Microsoft and Monika will face but neither firm knows what the future holds.