By Sanjay Gupta
When Microsoft bought the mobile devices business of Nokia for $7.2 billion early September, there was hardly any surprise. If anything, people wondered why the two companies, who had been close partners since 2011, “did not do it” earlier.
Never mind. They have chosen to do it now, and that is what is important.
One of the surprising parts of the deal, in my opinion, is that Microsoft has not acquired the Nokia brand, which continues to be owned by the Finnish company. What the Redmond giant has in its fold are Lumia and Asha smartphone brands, though under the deal Microsoft can continue to sell Nokia feature phones as well for 10 years (and most likely will).
If the Nokia brand were involved, the deal would of course have been more expensive. Besides, Nokia is not merely about making mobile phones just as IBM was not just about making PCs. I know the comparison is not completely apt but the current outcry of the death of a once-beloved mobile brand brings back memories of the hubbub following IBM’s sale of its personal computing business to Lenovo.
We all know that IBM emerged as a stronger company after shedding its PC skin. But can something similar be said about Nokia? And what about Microsoft? Will it become a potent force in mobiles?
As per the agreement, Nokia cannot use the Nokia brand on its own devices until December 31, 2015. But few would quarrel with the guess that it may not launch its own mobile handsets at all. (It has lost the battle in overall mobile sales, losing share from 39% of the global business five years ago to a lowly 15%.)
Nevertheless, the company is hopeful of the other 50% of its business still under its wing: comprising the NSN network infrastructure and services business, Here mapping and location platform, and the Advanced Technologies unit. The last one, per a company statement, “will explore new business opportunities through advanced research, development and concept products in areas such as connectivity, sensing and material technologies, as well as web and cloud technologies.”
From the looks of it, Nokia is going to collect the cash from Microsoft and carry on in life with the attitude: “Let it be mobility, if not mobiles!”
And as for Microsoft, on the surface it seems to be a relatively cheaper buy to bolster its weak position in the mobile space. But the hard question—Will the acquisition be able to soften the barrage of Android and iOS blows on the Windows Phone platform and devices?—will continue to haunt the firm long after CEO Steve Ballmer’s impending retirement.
– Sanjay Gupta
Editor, Express Computer