So much for avoiding channel conflict: Microsoft is buying Nokia's handset business in a Microsoft $7.2 billion deal that makes Microsoft a direct competitor to its Windows licensees.
Microsoft already had taken some steps in that direction earlier, by creating its own gaming business and platform. Microsoft then created its own branded tablet. Now Microsoft has moved directly into the branded mobile phone business, a move that finally makes Microsoft a supplier of branded phones, at retail, in competition with its operating system licensees.
To be sure, such channel conflict has been growing in the mobile ecosystem for some time. Google has had to face the challenge in supporting Android and also owning Motorola, which has made Google a competitor of device firms using Android.
So far, the channel conflicts primarily have been an issue for operating system providers and their licensees. But application providers generally increasingly looking at getting into the branded device business. Barnes and Noble and Amazon are the best examples in the tablet business.
What hasn't yet happened, but would take the channel conflict further, is a move by a major application provider directly into the mobile access provider business. On the fixed network side of the business, Google already has made that conceptual leap with Google Fiber, and now as a supplier of Wi-Fi at U.S. Starbucks locations.
Some observers think Microsoft Mobile will have to rely on the Nokia assets to win a bigger share of the mobile OS market. The acquisition essentially confirms that thesis.
The other angle is what Nokia will do, after the sale. Nokia then becomes a mobile infrastructure supplier, through Nokia Siemens Networks. That is a huge shift.
But some think BlackBerry will have to make some similar change as well, becoming a more focused supplier of services infrastructure, and less a supplier of handsets, if in fact BlackBerry can stay in the handset business at all.
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