Telefonica Backs Microsoft to Break Android/iOS Dominance

by Jeff Wiener on June 27, 2013

Telefonica, the world’s fifth largest mobile network provider, has decided its time to break the Android/iOS ‘duopoly’, announcing a landmark partnership with Microsoft to “promote and foster sales” of the latter’s Windows 8 mobile operating system.

The Spanish carrier, with operations in Europe, Latin America, and Asia, said in a statement Wednesday that this arrangement with Microsoft “reinforces [Telefonica’s] commitment to improve the current balance of mobile operating platforms on the market, encouraging it to be more diverse and less of a duopoly,” and it will serve as a way for the mobile giant to enhance “its commercial offering, bringing compelling alternatives to customers from the ecosystem of smartphones on the market.”

With Android and iOS accounting for a combined conservative estimate of 78 percent of the global mobile market share (others estimate the share to be as high as 90 percent), both operating systems have significant leverage against carriers, something which carriers loathe, and with the third spot in the OS ecosystem still up for grabs, its really not surprising to see carriers backing the Microsoft horse.

As we’ve seen here with Apple in the North American market, when a company produces a ‘must have’ device it is usually able to dictate terms to carriers, particularly when it comes to price. Carriers, who make money not only off term contracts but off selling the devices themselves, generally hate it when mobile company’s gain such leverage, as higher costs to carriers usually mean carriers need to find creative ways to actually make money off those devices.

So with the global mobile market firmly in the grip of Android and iOS, with companies like Samsung and Apple able to manipulate carriers like Telefonica, its no surprise to see the world’s fifth largest carrier back Microsoft, clearly the mobile backbencher with the most promise.

To wit, while there are several burgeoning options in the mobile OS sector, Microsoft stands as the only real third choice—aside from Blackberry I suppose—although Windows 8 has yet to gain any real traction as the preferred third option. The reason for Microsoft’s struggles has been a distinct lack of carrier support, as clearly Android and iOS are where the revenues (and consumer interest) are, but as Telefonica’s bold agreement shows, there comes a time when competition needs to be introduced to break the ironclad reign of the incumbents.

So why not Blackberry as Telefonica’s new chosen one? According to Jose Maria Alvarez Pallete, Telefonica’s COO, the choice has everything to do with Microsoft’s well-established “business culture.” “The Microsoft business culture is based on a model of value creation through its partners associates, which fits in perfectly with our culture and also with our way of doing business,” Pallete said in a statement.

In the end, while we wait to see how the North American mobile market responds, Telefonica’s choice to back Microsoft’s Windows 8 OS means we are likely seeing the long awaited third party in a global mobile triumvirate, great news for Microsoft and for carriers looking to break the dominance of Android and iOS.

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