Microsoft to Buy Nokia?

A report by a Russian blogger with good sources inside Nokia has prompted rumors that Microsoft is looking to buy the Finnish giant‘s phone business. Nokia denies the rumor.

The blogger, Edlar Murtazin, has a good track record: he predicted the Microsoft-Nokia partnership as long ago as December. Now he says that next week, Nokia will begin talks about the sales of the unit to Microsoft. The deal could close before the end of 2011. “Both companies are in a big hurry,” he writes (in Russian).

These sorts of rumors have surfaced in the past, but never in the context of an abandonment by Nokia of Symbian and an embrace of Microsoft as Nokia's key smart phone operating system.

On the other hand, some will question the logic. Microsoft always has preferred an "open" approach where its operating system can be freely licensed by many other hardware providers. Buying Nokia would put Microsoft into competition with its partners.

Buying Nokia would essentially put Nokia out of business. It isn't so clear that makes sense, either. And all such large acquisitions are fraught with integration risk. One hopes, for both companies, that the rumor is false.

Dissecting the Microsoft-Nokia Rumor

Enterprise SaaS Objections Decline Dramatically

It appears that enterprise resistance to software as a service solutions has lessened dramatically in 2010. At least that is what respondents to a Yankee Group survey seem to indicate. The big change is the dramatic drop in respondents who are taking a "wait and see" approach to SaaS.

Smart Phone Data Consumption Catching up to USB Modems

Historically, smart phone users have consumed far less data than USB modem users. "On the Orange Switzerland network, USB modems accounted for approximately 80 percent of data traffic in early 2010," says Declan Lonergan, Yankee Group analyst.

Telefónica O2 Czech Republic has had a similar ratio in early 2011. Today, Orange’s average modem user generates 4 GBytes of traffic per month. But it appears smartphone data consumption, though significantly lower, is catching up.

In part, that is a function of more smart phones being used, users consuming more data and consumers using their devices for longer periods of time.

The net result is that—in the case of Orange Switzerland, for example—by early 2011, smartphones far exceeded the number of active modems on the network, and these devices are now generating the majority of data traffic.

The trend is similar in the United Kingom, where Vodafone expects a fourfold increase in smartphone data, contributing to an estimated threefold increase in total mobile data traffic by 2015, Longergan predicts.

Global Service Provider Capex Will Grow Through 2014

Global capital investment by telecom and other service providers is growing, but nearly all the growth is found in markets other than the United States, a new forecast by Yankee Group suggests.

• Capital spending will increase 2.9 percent from 2010 levels, from U.S.$267.9 billion to U.S.$275.7 billion. Stabilization of the macroeconomic environment will lead to overall capital spending growth after two straight years of decline. In fact, we now forecast global telecom capital spending will continue to rise through 2014 (see Exhibit 1).
• EMEA and Latin America will grow capex the most. EMEA will grow by 5.1 percent, while Latin America—buoyed by strong demand for mobile broadband and value-added services (VAS) and aggressive investment by multi-national operators such as Telefónica—will grow by 6.2 percent.
• Asia-Pacific will remain resilient. The Asia-Pacific region, where last year we predicted a dramatic drop in spending among Tier 1 operators in China (in particular, China Mobile, China Telecom and China Unicom), proved to be remarkably resilient in their spending levels for 2010 and came in roughly flat (we had expected a drop of more than 10 percent). We expect to see a continuation of this investment cycle in 2011, with capex growing 4.4 percent year over year.
• North American capex will decline by 3 percent. North American operators will decrease spending slightly, from $70.8 billion in 2010 to $68.7 billion in 2011, making North America the only region reducing capex in 2011.

Enterprise Tablet Users Seem to Use More Collaboration Tools

A recent survey by the Yankee Group of enterprise tablet users suggests tablet users work out of the office much more than other workers. The survey also suggests the tablet is encouraging them to use more collaboration tools.

Tablet users are more likely to use blogs, consumer VoIP, podcasts, online backup an storage, wikis and content aggregators.

Business Tablet Owners Work Outside the Office

Tablet owners do most of their work outside their primary office, a survey by the Yankee Group suggests. Researcher Denise Lund says 55 percent spend less than 25 percent of their weekly working hours at their primary business office (exclusive of a home office). Tablet users are the classic "remote workers" or "traveling workers."

Tablet owners often work from hotels. Some 10 percent spend between eight percent and 35 percent of their time at a hotel.

More than half work from a customer site or office during the week. About 54 percent spend at least a portion of their weekly working hours at a customer site or office.

In a very condensed time frame (roughly a year), tablets have achieved one-quarter of smartphones’ presence in the enterprise, and one might argue that the computing functionality a tablet represents is sufficient for many remote workers, especially business or technology consultants.

The percentage of employees bringing tablets to work grew 120 percent in 2010, whereas enterprise-provisioned tablets grew only 64 percent.

Employees provided with tablets see an average uplift in productivity of 40 percent across all locations. As a comparison, workers provided with smartphones see just a 16 percent average uplift. It is important to note that we ask respondents to estimate their productivity before we ask which devices they use, so their responses are not skewed by their device usage.

Google’s Economic Impact: $64 Billion

Google's search and advertising tools provided $64 billion of economic activity in 2010, the company says.

Google derives that estimate by looking at business activity in each of the U.S. states and then estimating the economic value provided by Google Search and AdWords, Google AdSense and Google Grants.

To estimate the economic impact of Google Search and AdWords, Google uses two assumptions. First, that businesses make an average of $2 in revenue for every $1 they spend on AdWords. Google Chief Economist Hal Varian, developed this estimate based on observed cost-per-click activity across a large sample of Google advertisers.

The second assumption is that businesses receive an average of 5 clicks on their search results for every 1 click on their ads.

Google’s Economic Impact | 2010