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4 things you need to know about Microsoft's Nokia bid

Al Sacco | Sept. 4, 2013
Microsoft's acquisition of Nokia's devices business marks the end of an era for Nokia, once a leader in the mobile-phone space — and the beginning of another for Microsoft.

Microsoft announced today that it will purchase Nokia's devices and services business, as well as license Nokia patents and a mapping service, in a deal worth 5.44 billion euros (roughly $7.18 billion). Microsoft expects the deal to be finalized in early 2014.

Microsoft's acquisition of Nokia's devices business marks the end of an era for Nokia, once a leader in the mobile-phone space — and the beginning of another for Microsoft, as it becomes a smartphone (and likely "dumbphone") maker and takes control of an organization that has for years produced the most popular Windows Phone devices.

Here are four ways Microsoft's planned Nokia purchase could have far-reaching effects on Microsoft, Nokia, BlackBerry, feature phones and, potentially, the entire mobile industry.

1) End of One Era, Beginning of Another
This is effectively the end of Nokia as we know it.

The company, which played an undeniable roll in the development of the modern mobile market, is far from "dead," and it will continue to operate its networks and mapping business. It still owns its patents, too; Microsoft is licensing them, along with many other tech companies.

But Nokia phones are no more. You'll never see another Nokia smartphone, according to The Verge. (I'm not so sure that's the case; Nokia was likely working on other smartphones when the deal was made, and another device — possibly the rumored Lumia 1520 "Bandit" — could be released before the acquisition is finalized. But the point is the same: If the deal is finalized, Nokia phones will be more.)

At first glance, it seems like a smart move for Microsoft, which clearly has the funds to make such a purchase without much of an effect on its bottom line. I've long said that the best thing about Windows Phone devices is the Nokia hardware. Assuming the deal goes through, Microsoft will be the new owner of a very impressive hardware maker. That's unquestionably a good thing for Redmond, which has had its fair share of hardware struggles in the past.

Microsoft expects to be able to make up to four times more profit in the future on Nokia-made Windows Phone devices as it would if it didn't own Nokia technology. And as a handset maker, Microsoft will have more incentive to improve Windows Phone hardware and software integration.

Smart move or not, the deal won't necessarily make Windows Phone a true iOS or Android competitor. It's not just about good hardware or good software or integration anymore, and Microsoft faces a number of other challenges in mobile — not the least of which is a major image issue. Microsoft also has some very ambitious goals: It wants to quadruple Windows Phone market share by 2018, according to Engadget.

 

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