Microsoft-Nokia Merger 'Doomed', New Report Says

A new report from CBS Money Watch questions the viability of Microsoft's recent acquisition of Nokia's phone business.

The problem: both firms have fallen on tough times of late, meaning consumer confidence in their products is at an all-time low. At the same time, there just aren't enough apps available for Windows Phone devices.

The devices division of 150-year-old Finnish communications firm Nokia was recently acquired by Microsoft for $7.2 billion.

Many experts see the acquisition as an extension of an existing relationship between the two firms. It's a relationship that has involved selling Nokia smartphones equipped with Microsoft's Windows Phone mobile operating system. (Source: reuters.com)

(The acquisition has also fuelled rumors that Nokia chief executive officer Stephen Elop will replace outgoing Steve Ballmer as Microsoft's CEO.)

Gamble Unlikely to Pay Off, Report Says

But Money Watch says the acquisition is unlikely to help sell Windows Phone devices.

That's because consumers, who have showed little interest in Nokia smartphones or the Windows Phone platform in the past, may see this most recent move as both radical and desperate. If so, then it's unlikely to restore confidence in either firm and could keep consumers away from Nokia smartphones.

Right now, Microsoft's Windows Phone mobile operating system holds just 3.5 per cent of the rapidly expanding smartphone market. That's peanuts compared to the market shares held by Apple's iOS and Google's Android.

Not Enough Windows Phone Applications Out There

According to Money Watch, such a paltry percentage is "meaningful," and is related to the number of apps available for each platform. (Source: cbsnews.com)

"It means that developers are unwilling to invest resources into creating applications for Windows-based phones, which in turn results in a fallow app ecosystem for the devices," Money Watch says.

"If you're an Android user considering switching to a Nokia Lumia but find that you can't get the apps you already know and love, why would you switch? After all, you don't judge phones by call quality anymore. Now it's all about what you do online."

For Microsoft, the Nokia acquisition is evidence of how desperate the Redmond, Washington-based firm is to establish itself in the lucrative smartphone market.

Unfortunately, early indications would suggest this most recent (and very bold) move is unlikely to help the situation.