Chinese Mobile-Phone Makers Warn Microsoft on Nokia Deal

Strategic Insights -

Chinese mobile-phone makers Huawei Technologies Co. and ZTE Corp. have expressed concerns that Microsoft Corp.'s bid to acquire Nokia Oyj's handset business may result in higher patent fees on wireless technology. The two companies have asked the Chinese Ministry of Commerce to ensure that Microsoft does not raise patent licensing fees after the deal. This move comes as the ministry conducts an anti-monopoly review of the deal, with Microsoft having already won European Union approval in December.

The concerns from Huawei and ZTE are rooted in the companies' efforts to make inroads in the global smartphone market, where Apple Inc.'s iPhone and devices running Google Inc.'s Android platform dominate. Despite Chinese vendors making up four of the top seven producers worldwide, Samsung and Apple remain the top players, with Samsung holding a 31% market share in the third quarter, followed by Apple with 13%. Huawei and Lenovo Group Ltd. trailed closely, with 4.8% and 4.7% market shares, respectively.

Key Takeaways:

  • Huawei Technologies Co. and ZTE Corp. have expressed concerns that Microsoft Corp.'s bid to acquire Nokia Oyj's handset business may result in higher patent fees on wireless technology.
  • The Chinese Ministry of Commerce is conducting an anti-monopoly review of the deal, with Microsoft having already won European Union approval in December.
  • Huawei and ZTE have asked the Chinese Ministry of Commerce to set conditions on the deal to prevent Microsoft from raising patent licensing fees.
  • The two companies are concerned about the impact of the deal on their ability to make Android and Windows devices.
  • Microsoft and Nokia face an EU antitrust complaint filed by Google last year that alleged the companies were using patents to thwart competition.
  • Chinese vendors make up four of the top seven producers worldwide, with Samsung and Apple dominating global smartphone shipments.

Statistics:

  • Microsoft Corp.'s deal to acquire Nokia Oyj's handset business is worth $7.5 billion.
  • The European Commission has approved the deal, with the commission saying it will "remain vigilant and closely monitor Nokia's post-merger licensing practices under EU antitrust rules."
  • Huawei ranked third with 4.8% market share of the global smartphone market in the third quarter, while Lenovo Group Ltd. ranked fourth with 4.7%.
  • Samsung had a 31% market share of the global smartphone market in the third quarter, while Apple accounted for 13% in the same period.

Sources:

  • Bloomberg News
  • Chinese Ministry of Commerce
  • European Commission
  • IDC
  • Huawei Technologies Co.
  • Lenovo Group Ltd.
  • Microsoft Corp.
  • Nokia Oyj
  • Samsung Electronics Co.
  • ZTE Corp.