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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.

2) Nokia Is to Microsoft as Motorola Is to Google — With One Big Difference
Last spring, Google announced that it had finalised its deal to acquire Motorola Mobility, Motorola's handset division. In some ways, Microsoft's planned acquisition of Nokia looks like a very similar move.

But Microsoft and Google are two very different companies. Google's Motorola buy hasn't exactly helped it excel in the handset space — not yet, at least. In fact, Motorola just announced its first new lineup of phones since the Google buy in July. Honestly, the new devices aren't particularly impressive. The Moto X looks to be a step in the right direction, but it's a small step.

It took more than a year to see the fruits of Google's Motorola acquisition, so it could be even longer before we see the results of Microsoft's Nokia, which is not yet official.

The Nokia deal signifies a Google-like approach to the smartphone ecosystem from Microsoft; other handset makers can still build devices that run Windows Phone software, but Microsoft will work closely with its own handset division to build hardware that's deeply integrated with the Windows Phone OS, presumably giving it an advantage over hardware partners.

However, Google has Samsung as an external partner. Samsung is the largest handset manufacturer in the world and maker of the world's most popular lineup of Android devices, the Galaxy series. In other words, it's a very powerful partner and one that's helping to make Android even more popular, regardless of what Google itself does with the mobile OS.

By acquiring Nokia, Microsoft is swallowing its most successful handset partner. Samsung makes Windows Phone devices, but those handsets aren't nearly as popular as its Galaxy Android phones, and as such, it's safe to say that Samsung is not as invested in Windows Phone as it is in Android. HTC, another popular handset maker, also offers Windows Phone options but appears more invested in Android, thanks in large part to is popular HTC One smartphone.

Microsoft doesn't have Samsung's Galaxy success to fall back on. In a way, it's betting the farm on Nokia, because HTC, Samsung and other Windows Phone partners could potentially be turned off by its sidling up to Nokia.

3) Microsoft-Nokia Deal Puts BlackBerry in Even Tougher Spot
BlackBerry and Nokia were both kings of mobile in the not-too-distant past. Until today, both faced similar situations in modern mobile. Both companies are not seeing the handset sales they need to justify and maintain significant investments in their hardware businesses; consumer loyalty and interests are waning, and both are investigating strategic alternatives.

A significant difference is that Microsoft just found its new handset strategy. Now BlackBerry has one fewer potential buyer/investor. To be clear, Microsoft did not buy Nokia outright; it purchased a few attractive pieces of the company and licensed patents for a limited time instead of buying them outright, thereby reducing the risk and the cash it needed to hand out for patents.

 

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