Microsoft Buys Nokia’s Device and Services Business

Sep 3, 2013 by

This weekend Microsoft made a move that surprised many by actually purchasing most of Nokia. The deal which was announced late Monday night gives Microsoft all of Nokia’s devices divisions including design and manufacturing of their Lumia Windows Phone and Asha lines. They’ve also signed an agreement to license their HERE platform. Nokia’s CEO, Stephen Elop, will also be re-joining Microsoft as their Executive VP of Devices and Services.

When Nokia first jumped into the Windows Phone game about two years ago many began speculating that Microsoft would, or should, just purchase the Finnish company. We didn’t think that they would, or that they should, largely due to Microsoft’s relationships with the other Windows Phone device manufacturers. HTC and Samsung have been producing phones from the initial launch of the operating system, and Microsoft isn’t typically quick to stress relationships with hardware partners. Obviously that changed a little last year when Microsoft announced they were getting into the PC hardware game with the launch of their Surface PCs, but that is a much bigger market that Microsoft wouldn’t be able to dominate so easily with just two devices.

Things have changed a lot in the Windows Phone space since Nokia jumped in. Now over 90% of all Windows Phones sold today are made by Nokia! While Microsoft is saying that they plan to continue working with their partners we have to wonder if their partners will feel the same. HTC hasn’t been doing well at all, and Samsung is having no troubles selling their Android devices. We imagine it won’t be long before these two partners completely duck out of the Windows Phone ecosystem.

Another possible implication in this deal, which is expected to be approved in early 2014, is that it makes Stephen Elop a much more likely candidate to replace Steve Ballmer as the CEO of Microsoft. On top of his experience at Nokia he’s also been the head of Microsoft’s Business division that included Microsoft Office. In our opinion, he would definitely be a good candidate for the job.

So what do you think? Will this move help to solidify Microsoft’s place in the smartphone marketplace? Now that they will own the software and the hardware will it allow them to better compete with Apple and Google? Microsoft certainly hopes so. They are hoping to be at 15% market share by 2018. Sound off in the comments below.

 

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