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7 things on Microsoft's 2014 to-do list

Tim Greene | Jan. 3, 2014
Microsoft needs to make Nokia work, get Office on iOS, and find Ballmer's successor in 2014.

2013 was a busy year for Microsoft, which announced that CEO Steve Ballmer will leave the company after 33 years, upgraded its controversial Windows 8 platform, doubled down on its Surface tablets, reveled in the success of Office 365, and successfully tweaked Windows Server. But there's more to do in 2014.

Here's a look at seven things Microsoft should put on its to-do list for 2014.

No. 1: Make Nokia work
Microsoft could have just strengthened its partnership with Nokia, perhaps investing heavily in the company to become a major shareholder with sway over what Nokia does. Instead it ponied up $7.2 billion to own it. In buying the company Microsoft gains total control over its hardware products phones primarily but also tablets.

The Nokia deal falls in line with Microsoft's aim to be a products and services company. It did a pretty good job with its Surface hardware, even when it had virtually no tablet-manufacturing experience. Nokia is already credited with making good phones, but they're saddled with the Windows Phone operating system, which has yet to capture the imagination of buyers like Android phones and the iPhone have.

However, measuring the success of the Nokia deal isn't about whether its hardware can unseat these more popular devices. Worldwide there are vast markets for low-end phones in markets where cell service is still taking hold and where Windows Phone can make headway, says IDC analyst Ramon Llamas.

Nokia makes the Asha family of low-end feature and smartphones — three of which the company claims are the top three selling phones of their kind in India, the Middle East and Africa, which are considered undeveloped markets that hold vast potential for new sales. Nokia announced three new Asha smartphones this fall to sell in Africa, Asia-Pacific, Europe, and the Middle East (two of them in Latin America as well) for between $69 and $99.

Windows Phone is doing well enough that it might finish the year as the No.3 phone operating system - albeit at a great distance behind Android and iOS - and beat out Blackberry, says Llamas. In the last quarter Apple sold about 34 million iPhones versus about 7 million Windows Phones, he says. "They're not falling by the wayside, I have to give them credit," he says.

Owning Nokia will enable faster decision making and turnaround times on innovations, he says, potentially making the phones more competitive. If Microsoft can differentiate Windows Phone from high-end competitors, it could make advances in the developed markets of North America, Japan and Europe. "Android and Apple are entrenched but not 100% locked down forevermore among users," Llamas says.

Nokia tablets could also be a boon. Microsoft's Surface RT tablets sold well at drastically reduced prices as the company tried to unload inventory in preparation for selling its successor, Surface 2. That's a device without cellular connectivity. Nokia already sells a tablet based on the Windows RT operating system plus 4G wireless for $399 through a service-plus-hardware deal with AT&T. It's also announced Lumia 2520, a Windows RT tablet with LTE for $499.


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