Hasn't Microsoft come a little late to the mobile party?

Microsoft/Nokia deal

News this morning that Microsoft have bought Nokia’s mobile phone unit for £4.6bn is a natural step for the two companies, who have already been working together very closely on smartphones since originally signing a strategic partnership in February 2011. But the question of whether two companies which have both have been accused of falling behind in the smartphone race and resting on their laurels can really regain lost ground, is one that seems too little too late.

The deal, which will see Microsoft license Nokia’s brand to use on its products for a 10-year period, was hailed by Microsoft chief executive, Steve Ballmer, as: "…a bold step into the future — a win-win for employees, shareholders and consumers of both companies… We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family."

Nokia’s shares rose an incredible 45 per cent on the news and on first glance, it seems like Microsoft have made a canny move in purchasing the second-largest mobile phone maker in the world, who managed to ship 60.9 million units in the second quarter of 2013. However, the truth is that the lion’s share of these sales were feature phones, less powerful than their smartphone brethren, and a shrinking market sector, which actually resulted in Nokia’s sales dropping by 27 per cent from the same quarter in 2012.

But where Microsoft is really hoping to make some waves is with Nokia’s Lumia range of smartphones, which run Microsoft’s Windows Phone 8 operating system and have seen robust growth of 78 per cent year-on-year. In their announcement to the media, Microsoft made a big splash of the fact that the Lumia range was outselling Blackberry smartphones in 34 markets. This seems like a great achievement, but hides the fact that shipments are a country mile behind the likes of Apple’s iPhone and Samsung’s devices running Google’s Android operating system, of which more than 100m were sold in Q2 this year.

With such well developed competitors, it’s going to be a long hard road to fight their way back to the top, especially given the nature of the smartphone market today. It is not just the hardware and the operating system that informs a consumer’s decision on which phone to purchase, it is also the range of apps on offer. Apple and Google’s Android launched their app stores as far back as 2008 and have stolen a march on the Microsoft alternative. By July 2013, both Apple and Google celebrated app downloads in excess of 50 billion.

Microsoft’s Windows Phone Store, on the other hand, has yet to reach such dizzying heights, and this was one of the biggest criticisms of Nokia’s decision to embrace Microsoft’s operating system for its Lumia range. The first product to be launched in November 2011, the Lumia 800, was lauded as a compelling alternative to the duopoly of Apple iOS and Android powered phones, but many critics voiced concerns over the relatively limited range of apps available for the Windows platform. Although the situation has been constantly improving since then, it still lags a long way behind.

To make matters worse, Microsoft has something of an uneven track record as a hardware manufacturer. Traditionally a software developer, it has only had limited exposure in the hardware sector, most recently with the launch of its Surface tablet last year, which has failed to live up to expectations. The company was recently forced to slash the price of the tablet, after writing down $900m because of unsold stock of the Surface RT, more than the $853m it had earned for sales of the device.

Hopefully some of Nokia’s expertise in this area will rub off on the software giant, otherwise things could go from bad to worse in the mobile phone sector for both companies.

Photograph: Getty Images

Mark Brierley is a group editor at Global Trade Media

Photo: Getty
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After Richmond Park, Labour MPs are haunted by a familiar ghost

Labour MPs in big cities fear the Liberal Democrats, while in the north, they fear Ukip. 

The Liberal Democrats’ victory in Richmond Park has Conservatives nervous, and rightly so. Not only did Sarah Olney take the votes of soft Conservatives who backed a Remain vote on 23 June, she also benefited from tactical voting from Labour voters.

Although Richmond Park is the fifth most pro-Remain constituency won by a Conservative at the 2015 election, the more significant number – for the Liberal Democrats at least – is 15: that’s the number of Tory-held seats they could win if they reduced the Labour vote by the same amount they managed in Richmond Park.

The Tories have two Brexit headaches, electorally speaking. The first is the direct loss of voters who backed David Cameron in 2015 and a Remain vote in 2016 to the Liberal Democrats. The second is that Brexit appears to have made Liberal Democrat candidates palatable to Labour voters who backed the party as the anti-Conservative option in seats where Labour is generally weak from 1992 to 2010, but stayed at home or voted Labour in 2015.

Although local council by-elections are not as dramatic as parliamentary ones, they offer clues as to how national elections may play out, and it’s worth noting that Richmond Park wasn’t the only place where the Liberal Democrats saw a dramatic surge in the party’s fortunes. They also made a dramatic gain in Chichester, which voted to leave.

(That’s the other factor to remember in the “Leave/Remain” divide. In Liberal-Conservative battlegrounds where the majority of voters opted to leave, the third-placed Labour and Green vote tends to be heavily pro-Remain.)

But it’s not just Conservatives with the Liberal Democrats in second who have cause to be nervous.  Labour MPs outside of England's big cities have long been nervous that Ukip will do to them what the SNP did to their Scottish colleagues in 2015. That Ukip is now in second place in many seats that Labour once considered safe only adds to the sense of unease.

In a lot of seats, the closeness of Ukip is overstated. As one MP, who has the Conservatives in second place observed, “All that’s happened is you used to have five or six no-hopers, and all of that vote has gone to Ukip, so colleagues are nervous”. That’s true, to an extent. But it’s worth noting that the same thing could be said for the Liberal Democrats in Conservative seats in 1992. All they had done was to coagulate most of the “anyone but the Conservative” vote under their banner. In 1997, they took Conservative votes – and with it, picked up 28 formerly Tory seats.

Also nervous are the party’s London MPs, albeit for different reasons. They fear that Remain voters will desert them for the Liberal Democrats. (It’s worth noting that Catherine West, who sits for the most pro-Remain seat in the country, has already told constituents that she will vote against Article 50, as has David Lammy, another North London MP.)

A particular cause for alarm is that most of the party’s high command – Jeremy Corbyn, Emily Thornberry, Diane Abbott, and Keir Starmer – all sit for seats that were heavily pro-Remain. Thornberry, in particular, has the particularly dangerous combination of a seat that voted Remain in June but has flirted with the Liberal Democrats in the past, with the shadow foreign secretary finishing just 484 votes ahead of Bridget Fox, the Liberal Democrat candidate, in 2005.

Are they right to be worried? That the referendum allowed the Liberal Democrats to reconfigure the politics of Richmond Park adds credence to a YouGov poll that showed a pro-Brexit Labour party finishing third behind a pro-second referendum Liberal Democrat party, should Labour go into the next election backing Brexit and the Liberal Democrats opt to oppose it.

The difficulty for Labour is the calculation for the Liberal Democrats is easy. They are an unabashedly pro-European party, from their activists to their MPs, and the 22 per cent of voters who back a referendum re-run are a significantly larger group than the eight per cent of the vote that Nick Clegg’s Liberal Democrats got in 2015.

The calculus is more fraught for Labour. In terms of the straight Conservative battle, their best hope is to put the referendum question to bed and focus on issues which don’t divide their coalition in two, as immigration does. But for separate reasons, neither Ukip nor the Liberal Democrats will be keen to let them.

At every point, the referendum question poses difficulties for Labour. Even when neither Ukip nor the Liberal Democrats take seats from them directly, they can hurt them badly, allowing the Conservatives to come through the middle.

The big problem is that the stance that makes sense in terms of maintaining party unity is to try to run on a ticket of moving past the referendum and focussing on the party’s core issues of social justice, better public services and redistribution.

But the trouble with that approach is that it’s alarmingly similar to the one favoured by Kezia Dugdale and Scottish Labour in 2016, who tried to make the election about public services, not the constitution. They came third, behind a Conservative party that ran on an explicitly pro-Union platform. The possibility of an English sequel should not be ruled out.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.