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Microsoft's Nokia buyout poses "little risk" to Android, could be used to help "leverage the success of Xbox" - analyst

With Microsoft dropping $7.2 billion on Nokia’s smartphone business, Robert W. Baird & Co. analyst Colin Sebastian has weighed-in on the buyout, stating that it presents little risk to Android or Google's mobile business.

Sebastian, however believes Xbox will be the firm's "silver bullet" and expects the "mobile operating system battle will shift quickly" into the living room and onto TVs.

"We note that Microsoft likely felt some added urgency to control more of the mobile and tablet hardware ecosystem, especially following the recent struggles with the Surface tablet," said Sebastain.

"Looking ahead, we believe that Microsoft may be better able to leverage the success of Xbox and the upcoming console upgrade cycle, by combining hardware initiatives, and integrating content offerings across devices."

According to Sebastian, Windows Mobile represents less than 5% of the smartphone marketshare compared to Andorid's greater than 50% share, and considering Nokia already accounts for "roughly 90% of Windows Mobile devices," the buyout won't mean much to mobile with other operating systems.

The analyst expects original equiment manufasturers to "continue favoring Android due to its leading consumer mindshare, significant app developer support, high value mobile apps from Google and more generally, the fast pace of Android innovation."

With "Windows no longer an independent alternative to Android," and Nokia's "dominant share of Windows Mobile," Sebastain feels "Microsoft is doing nothing more than insourcing the vast majority of the Windows phone business, and will now control Windows Mobile hardware, similar to Apple on iOS vs. Google.:

"We believe that Windows Mobile may no longer represent a potential viable alternative to Android, and app inferiority remains an issue for Windows," said the analyst. "According to recent industry and company data, Google Play currently has more than a million apps available for download on Android devices, while Apple's App Store has more than 900,000 apps.

"In contrast, Windows Mobile has roughly 160,000 apps, the majority of which see minimal usage. As such, we see little reason to expect that developers will allocate more resources to Windows Mobile following the Nokia deal."

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