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

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Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.