Microsoft’s acquisition of mobile device manufacturer Nokia brings a major business under Micosoft’s company banner. With the move, the tech giant has the potential to build a large market share that establishes the company as a major mobile device player, along with leaders Samsung and Apple.
A recent article in Forbes contends that Microsoft market share is facing a critical moment. The editorial cites the Economic Rule of Three, a 1976 theory contending that a mature market can only have three major players. Samsung and Apple are both well ahead of the pack and unlikely to lose their current market position — at least not anytime soon — and that leaves only one remaining spot for a market contender.
The economic theory also argues that these major players need to attain a market share of at least 10 percent. Microsoft has yet to reach that threshold, but with the Nokia purchase it has a shot at hitting that milestone.
Looking Ahead to a Growing Market Share
Nokia was a major player before selling to Microsoft. In Europe, its market share had reached at high as 11 percent, depending on the region. But both Nokia and Microsoft operated in a financially precarious space — larger than niche companies, but smaller than full-fledged generalist providers.
Microsoft’s Windows Phone has struggled to establish itself in the U.S., where its market share is just 3.5 percent — this despite the company’s efforts to sell the product as a generalist mobile device. Going forward, Microsoft market share in the United States will be a big focus of the company’s strategy — with the numbers in Europe well ahead of domestic sales, the U.S. is clearly the barrier to success.
Microsoft is hoping that its improved strategy, bolstered by the Nokia purchase, can help it achieve a 15 percent market share by 2018. Nokia gives the company many new tools to pursue this goal — newly acquired hardware, patents and personnel will equip Microsoft to wage a war for the final spot at the top of the mobile market.
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