The Magic Bullet That Microsoft Corporation Would Rather Not Fire

Microsoft has struggled to win a place in the mobile market. Now, Nokia may have found the way to make it happen -- while proving that Windows Phone is a dead end.

Feb 13, 2014 at 8:00PM

Microsoft (NASDAQ:MSFT) is about to become an Android phone designer. By way of soon-to-be-aquired handset specialist Nokia (NYSE:NOK), The Wall Street Journal says that Microsoft will have a low-end Android phone to sell by the time the Nokia deal closes.

Citing its usual anonymous sources, the Journal explains that Nokia had been working on an Android phone before Microsoft stopped by with a $7.4 billion buyout check. Scheduled for unveiling at the Mobile World Congress conference in two weeks, this phone would fill a void in Nokia's product portfolio, where Microsoft's Windows phones just don't play. Google (NASDAQ:GOOGL) designed Android to run on lower-end hardware, where Windows Phone refuses to work at all.

This report also jibes with advice from The Guardian's Charles Arthur, who says that Nokia and Microsoft should create their own version of Android in order to explore the untapped low-cost market in high-volume geographies like India and China.

Now, Google has made it hard for outsiders to fork their personal take on the Android platform. Do that, and you lose access to some of the most important pieces of the Android ecosystem, like the Google Play app store or built-in apps to take advantage of Gmail and other Google-backed services.

Nokia Android

Image created from official logos, provided by Nokia and the Open Handset Alliance.

But that hasn't stopped third parties from going this route. BlackBerry (NASDAQ:BBRY) built Android compatibility into its BlackBerry 10 software; it's easy for developers to port Android apps over to BlackBerry, and BlackBerry 10 can even run some unmodified Android apps in a compatibility layer.

Then there's (NASDAQ:AMZN), which broke away from the standard Android platform to power its Kindle series of e-readers. Amazon provides its own app store, and the missing Google apps often have their place taken by third-party alternatives or Amazon's own apps.

So sure, Nokia and Microsoft could give it a try. The two companies certainly have the resources to build their own core apps, redirecting Nokia Android users to Microsoft's Bing ecosystem whenever possible.

Worth a try?
Will cost-conscious consumers buy these handsets? Is it worth the effort?

Maybe so. Nokia built a massive brand in emerging markets, back when the world cared about feature phones. This brand awareness, coupled with the proven Android platform in a cost-effective product, could be the silver bullet that Microsoft never could build on its own.

Moreover, Nokia is well known for its high-quality phone cameras, including a contract to offer Carl Zeiss' high-quality lens systems. Other companies put Zeiss lenses in stand-alone cameras, but only Nokia can offer this feature in smartphones. Admittedly, this is more of a mid-market or upscale selling point, but a nice camera never hurt anybody.

Nokia Lumia 900, featuring Carl Zeiss optics. Source: Nokia.

Microsoft's hard-to-swallow payoff
So yeah, if Nokia goes through with this idea and creates its own spin on Android, the brand might actually gain traction in high-growth developing markets. That'll be a bitter pill for Microsoft to swallow, since it would essentially prove that Redmond's mobile platform can't compete on its own merits. But at the very least, Microsoft would get some sustainable revenue out of its $7.4 billion Nokia buyout.

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Anders Bylund owns shares of Google. The Motley Fool recommends and owns shares of and Google. It also owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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