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Date
September 5, 2013

The Microsoft-Nokia Deal

Transcript

Maggie: If you feel like everyone has a cell phone nowadays, well, you are not that far off. It is estimated that by next year, there will be more active cell phones in the world than there are people. A lot of them are smartphones. And as Shelby Holliday explains, that smart market just got a lot more competitive.

Shelby: Watch out, iPhones and Androids! The global smartphone game could get a whole lot more competitive.

Commercial: It’s the Windows phone.

Teen: I’ve seen the Windows phone, and I actually think it’s pretty cool.

Shelby: This week, Microsoft made a big play to gain ground on Apple and Google.

Steve Ballmer: Today’s announcement is a bold step into the future.

Shelby: On Tuesday, CEO Steve Ballmer said that Microsoft is buying Nokia’s entire line of phones and patents for $7.2 billion. The plan is to help Microsoft catch up with its smartphone rivals.

Ballmer: Windows phone has grown over 78% in the last year and is now clearly the number 3 offering in the marketplace.

Shelby: But Microsoft has a long way to go if it wants to compete in a market dominated by Apple’s iPhones and Google’s Android devices.

There are more than 1 billion smartphones in the world, but just a fraction of them are made by Microsoft and Nokia.

When it comes to smartphone sales in the U.S., Google’s Android-operated devices take the cake with 51% of the pie; Apple’s iPhones are second best with 43.4%; and Microsoft’s Windows-based phones trail far behind at just 3.5%.

Brian Cooley: We are right now in a place in the mobile electronics world where we are questioning are there two chairs at the table or three? There may not be a third. Microsoft needs to make the chair and then sit in it. It’s twice the work.

Shelby: Brian Cooley, who works for the technology website CNET, says the deal could help Microsoft get back in the game.

Cooley: Microsoft had to get more serious about mobiles. They can’t check out and say we’re just not going to compete in that business fully. That’s not an option anymore.

Shelby: Under former CEO Bill Gates, Microsoft once dominated the world computing market, and its fortune was built on its desktop software.

Bill Gates: We’re in a golden age of computer science.

Shelby: But desktop sales have declined dramatically in recent years, and the company has fallen behind and struggled to catch the attention of young people.

Teen: I’ve never had Microsoft computer – like, stuff, so I don’t…except for maybe, like, Microsoft Word. That’s about it.

Shelby: Last summer, Microsoft launched a tablet called Surface, but it hasn’t clicked with consumers, selling about 1.7 million units in the same time Apple sold 57 million iPads.

Professor Ed Lazowska: Part of this is having really high quality products, part of it is having them at the right time, and part of it is there being a cool factor.

Shelby: Microsoft already owns a lot of popular products, like Bing, Microsoft Office, Xbox, Skype and Internet Explorer. Now with the addition of Nokia, it hopes to roll them into a device that will sell around the world.

Shelby Holliday, Channel One News.

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