WOW! But not all that surprising…
OK, Microsoft buys Nokia’s devices division & licensed their IP non-exclusively for 10-years for USD$7B. Nokia will keep their Nokia Networks & Here Mapping, not sure about their Advanced Imaging group (Scalado) though.
More information here. Microsoft acquires Nokia’s Devices division.
Nokia has been hemorrhaging market share for a long time. Symbian was fine as an advanced feature-phone but based on today’s metric of counting apps & multi-touch, it’s not really considered a modern smartphone. Sony Ericsson withdrawal from Symbian in 2010 hit the final nail in Symbian’s coffin as a mobile OS. Nokia just prolonged the inevitable and by the time the board realize it, it was almost too late. Which is why they brought in an ex-Microsoftie, Stephan Elop.
There are some undercurrent of mistrust generally coming from an ex-Nokia executive Tomi Ahonen but that’s to be expected because after all, Microsoft’s Windows Mobile was an competitor’s platform for the longest time, even though Stephan Elop was in charge of Microsoft Office 2010 & Microsoft Dynamics for 2 years only. The truth is probably somewhere in between but that point is moot since the Symbian-based Nokia Asha product line didn’t do as well as expected in China & India.
Nokia has underestimated the demand for high-quality smartphone at an affordable price. Which is why the Nokia Lumia 520 sold extremely well while the Asha line didn’t. Everyone seems to want to launch expensive flagship phones but market share is built from bulk purchase of entry-level & mid-tier phones. In fact, most of Android’s market share come from cheap phones & even “smart” feature-phones using Android.
Despite the fact that investors are increasingly questioning Elop’s “Burning Platform” approach, it stands to reason that the world don’t need another Android maker. HTC is tepidly recovering with their HTC One, Sony & LG are posting some profits for their Android handset business after years of loss & Moto still seems to be flat on their face. Only Samsung is making real money so Nokia isn’t so bad IF you consider their record USD$3B lose in 2012. However, turning businesses around is always painful and Elop has handled it pretty well.
If Nokia had gone with Android in 2011, they may not have been desperate enough to bring OIS to phone cameras (Apple & Samsung are not expected to bring OIS in 2013), or improve Navteq (now called Here) to be a true Google Maps competitor in 2013, or Wireless charging across most of their product range starting in 2012. All this happened within 2 years of Elop coming on board.
The Nokia Lumia 800 was my first Nokia phone ever, while the Lumia 920 was my second. I’ve always used Windows Mobile because it’s a true smartphone compared to Symbian but seeing how Nokia was committed to Windows Phones & bringing so much to the eco-system, I remain convinced that going with Nokia phones was the right move because other partners like HTC & Samsung eventually gave more resources to their Android phones & I can’t blame them since it made more business sense. And I was right. My third Windows Phone will be the upcoming Nokia Lumia 1020, the 41 megapixel monster which looks just like my Lumia 920. 🙂
3 months ago, it was reported that Microsoft and Nokia talks about Nokia’s hardware division sales to Microsoft had collapsed. On retrospect, this was a red herring created to throw everyone off-balance. Good business move. I always wondered why that news pop out of nowhere.
With HTC going down (executives leaving and/or defrauding the company, Q3 2013 expected loss) & Samsung disinterested in WP and plans for Tizen (based on Intel Atom SoC rather than ARM), now is the right time for Microsoft to buy Nokia. No one will likely challenge this move and it’ll help Windows Phone immensely.
With the combined strength of Bing Maps + Here Maps, Microsoft now have 2/3 of what’s needed to take on Google Maps. The last one 1/3 is Foursquare, which Microsoft is actively courting.
MS has also licensed a huge treasure trove of Nokia IP, which has proven to be lucrative & effective in fighting off patent trolls unlike Moto’s IP. They have also acquired Nokia’s up & coming Lumia brand which is synonymous with innovation & clever advertising.
Nokia Asha & other feature-phones will most likely be wiped off the roadmap by 2014. I could be wrong but I don’t see Microsoft is interested in fighting with China & India low-end phone makers.
Nokia will have access to Microsoft (Pegatron) factories in China, Microsoft will also acquire Nokia supply-chain management & manufacturing capabilities so there’ll be no more USD$900m write-down.
Elop has proven to be a great person in reversing Nokia’s diminishing fortunes but at the same time, conspiracy theorists will continue to accuse Ballmer of sending Elop to Nokia as an acquisition target some time in the future. The truth is probably in between, since Microsoft has ALWAYS sent seed money & people to friends & frenemies alike.
This is part of Bill Gate’s legacy. To have Microsoft software everywhere whether they be thay friend or thay enemy because in business, everyone is a bit of both.
We already know that Bill Gates, Microsoft board & ValueAct all had a role in Steve Ballmer’s surprise retirement announcement a few days ago. His leadership was controversial from the beginning but he has fans and critics alike.
Now is also a good time for him to step down because although he had keep Microsoft growing strongly all these years, he obviously missed the mobile boat. It can be argued that Microsoft needs a CEO that doesn’t exist, someone who’s a strong Microsoft team-player & supporter, someone who has strong leadership & management skills and someone who has a good track record.
Stephan Elop seems to fit the bill very well & many pundits are already predicting this deal confirms Stephan as the best candidate since he’s a solid Microsoft supporter, so he wouldn’t rock the boat too much like selling off Bing; he’ll bring an outside perspective to Microsoft but is not marginalized like Steven Sinofsky; he’s shown his brilliance in making people like the Office 2010 ribbon & saving Windows Phone and finally, his PR-friendly face & press-friendly nature means there may be less bad press and more love for Microsoft moving forward. Perception is a very important factor in the success in any product or services.
Finally, as I’ve mentioned in a post from last year where I predicted Windows 8 & WP8 will share code in a common IDE, we may actually see WP9 be based on Windows RT, thus coming full circle where Windows is finally Mobile.
Oh, did I mention Xbox One will also run Windows 8? 😉