Something which has been speculated for quite some time has suddenly become a reality. Microsoft has purchased Nokia's phone business, in its entirety for a handsome 7.2 billion, thus marking an end of an era. Interestingly this is slightly lesser than Microsoft spent to purchase Skype a couple of years ago. Nokia is known for shaping the mobile phone industry much through its industry helping shape it to what it has become today, and we can definitely expect the mobile landscape to change going forward.Microsoft started a close partnership with Nokia in 2011 which resulted in the company sharing their services. We saw Nokia's mapping services integrated into Microsoft's Bing services and Microsoft's Office suite making its way to Symbian devices. Since then Nokia's Lumia Windows Phones have made a big name for themselves leading the market among their Windows Phone brethren.
"It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies," said Microsoft’s outgoing CEO Steve Ballmer. "Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services."
Risto Siilasmaa, Nokia's Chairman of the Nokia Board of Directors., said on Tuesday that the sale of the handset business was the logical step in the company’s evolution but still pulled on his heartstrings.
"Selling a business is sometimes the right cause of action, but it’s emotionally complicated," Mr. Siilasmaa said. "After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders," said Mr. Siilasmaa
"Selling a business is sometimes the right cause of action, but it’s emotionally complicated," Mr. Siilasmaa said. "After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders," said Mr. Siilasmaa
Nokia remains the second-largest shipper of mobile phones in the world, after Samsung, but that is largely because of lower-end feature phones, from which consumers are moving away. Nokia is no longer among the top five makers of smartphones.
A big question is whether Microsoft and Nokia will succeed as one company where they have not as close partners. Mr. Ballmer said Microsoft and Nokia had not been as agile separately as they would be jointly, citing how development could be slowed down when intellectual property rights were held by two different companies.
A big question is whether Microsoft and Nokia will succeed as one company where they have not as close partners. Mr. Ballmer said Microsoft and Nokia had not been as agile separately as they would be jointly, citing how development could be slowed down when intellectual property rights were held by two different companies.
The plan to buy Nokia is likely to upset the other companies that use Microsoft’s Windows Phone operating system on their devices, notably HTC and, to a lesser extent, Samsung. However Microsoft Executive VP Terry Myerson says that the acquisition of Nokia "will help make the market for all Windows Phones, from Microsoft or our OEM partners." But just like other Android manufacturers became suspicious of Motorola and openly wondered if Google would play favorites with Motorola, Microsoft could face the same suspicions from other Windows Phone manufacturers.
Nokia stands to gain EUR 3.2B ($4.22B) from the deal, and it will continue to focus on network infrastructure, mapping and location, and further technology development after the transaction is completed.
What do you think of Microsoft's purchase of Nokia? Do you think Nokia will be able to operate independently under Microsoft's leadership much like Skype is being operated or will the company be overshadowed and loose its essence?