Microsoft buys Nokia’s mobile division

4th September 2013

Nokia acquisition reinforces Microsoft’s renewed focus on mobile

Microsoft has announced its acquisition of Nokia’s mobile devices and services arm in a deal that has been well received by analysts. The deal, worth  will see Nokia’s patents and mapping services transfered to Microsoft as well as about 32,000 Nokia employees.

Steve Ballmer said, “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.”

The acquisition of Nokia follows a partnership between the two companies since 2011 that has seen Nokia use Microsoft’s mobile operating system on its devices. For Microsoft, it shows very much a statement of intent with regards to mobile, coming shortly after the announcements of a restructuring to deliver its long-term strategy and Ballmer’s intention to retire within 12 months.

Microsoft has been widely criticised for moving too slowly into the mobile space and lags way behind Apple and Google in terms of mobile O/S market share. It’s partnership with Nokia, however, and a positive response to Windows Mobile 8 have seen it begin to gather some momentum that it can begin to build on.

Roberta Cozza of Gartner explains, “Depending on the way they figure out the organisational structure with the Nokia people inside, they can allow Nokia to innovate around hardware, and get input from them on the operating system, and gain the opportunity to deliver more competitive products. Nokia has know-how of this market that goes beyond the hardware.”

Despite their respective troubles, both Microsoft and Nokia still have a huge amount of expertise and intelligence within the companies. Both are capable of producing excellent products and a tighter working relationship could bear some strong results.

Having already been working in partnership since 2011, the integration of the two companies is expected to be smooth. The only major question is what will become of Nokia’s feature phone lines, which still sell in huge numbers around the world. With Microsoft’s focus on its mobile operating system, it may not wish to continue targeting the feature phone market.

For Nokia’s part, the company will concentrate on three main areas of business following the sale – network equipment manufacturing, mapping and location services and the development and licensing of technology.

Risto Siilasmaa, the new Nokia Interim CEO 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.”

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