March 17, 2014

CeBIT Hanover - Microsoft Accelerates Support for Android

GOOG, GOOGL, MSFT, NOK, NOKIA FH
By Hartmut Leuschner
Microsoft may eliminate Windows Phone OS licenses later this year and make most of its enterprise software available on Android within the next 12 months.

Sources at CeBIT Hanover said Microsoft Corp. is moving away from charging for its wireless platform (Windows Phone) and shifting to an application-driven business model. "We believe they will completely remove license fees for Windows Phone OS," an engineer said. One source said he heard Microsoft is planning to make 90% of its software offerings available on Google Inc.'s Android in the next 12 months. "Applications like Lync, SharePoint and mobile printing are already available on Android. Microsoft will port most other services to Android by 2015," an engineer source said. The source said the push toward Android does not necessarily mean a loss of license revenue as Microsoft is believed to get between $7 and $12 in IP fees for every Android phone with ActiveSync.

According to carrier sources, Microsoft is expected to face significant legal hurdles in its effort to become a platform-agnostic company. A manager of a European operator said Microsoft is facing serious legal issues with its acquisition of Nokia Corp.'s device division. The source said Microsoft has traditionally paid taxes for its software sales in only a handful countries from where it shipped the products. With the Nokia device acquisition, sources say, Microsoft needs to pay taxes in every country where the devices are sold -- including additional software that might have been added to the device pre-sale. "We believe this is the biggest trouble that they are facing this year, more serious than the question of how fast they are gaining market share with Nokia X," a carrier contact said.

Procurement managers at the show said they still don't understand why Microsoft bought Nokia' s device division. "We have no interest whatsoever to put in orders for the Nokia X device. It is not competitive with the regular Android platform," one buyer said. Another said he could imagine some sales in emerging markets, where Nokia has some brand value. For Western Europe, though, he expects the Nokia X launch to be a "big flop."