Nokia clever to dump devices

04 Sep 2013

I’ll pick up where my esteemed colleague John Tanner left off – namely, was Microsoft’s acquisition of Nokia’s devices business “a matter of time?”

The conspiracy theorists among you may agree wholeheartedly. Stephen Elop, an ex Microsoft man, takes the helm, and three years later sells Nokia’s mobile phone business to his former paymasters. Elop will remain the leader of the devices business and report directly to current Microsoft chief, Steve Ballmer. A further 32,000 Nokia staff will also transfer over as part of the $7.2 billion deal.

On the other hand, Elop may just have taken a bold step that Nokia’s older guard struggled to commit to, and one that is inherently Nokia. Let’s not forget this is a company that has been around for 150 years and that mobile phones form only a short part of that history, even if most of us only know the firm for its devices.

The company wasn’t afraid to stop manufacturing wellington boots when its engineering and technology arms started to bear fruit, and ditching mobile phones to focus on mapping and navigation, networks, and other services may simply be the most practical way to ensure the future of Nokia the company.

How Elop’s departure will go down with Nokia’s shareholders remain to be seen. Earlier this year, stakeholders called on the chief executive to review his decision to adopt Windows Phone software over the vendor’s own Symbian operating system, following continued declines in device shipments.

Also consider that there appears to be nothing in its agreement with Microsoft to stop Nokia re-entering the device segment in future if market conditions improve, bar a commitment to allowing Microsoft to use its brand over the next decade. In this scenario, Nokia would have its pick of operating systems – even Symbian - and could use a different brand, thus immediately distancing itself from its recent struggles.

For now, then, I’ll declare this a canny move by Nokia. Whether it proves the turning point in Microsoft’s traditionally bad fortunes in the mobile device sector is a question for a different day.

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