Nokia-MS deal all too obvious?

23 Sep 2013

As featured on TM Forum's the Insider blog.

There has been an absolute flurry of commentary following the acquisition of Nokia’s mobile phone and services business by Microsoft but I have resisted, until now, to add my bit. I was not particularly unique in foreseeing this momentous event, but one wonders why all the fuss now that’s it’s almost done and dusted.

The questions none of the Nokia shareholders seem to be asking, or even the all-powerful Securities Commission, is whether the whole thing had been planned from the time Stephen Elop shifted from Microsoft to take over the Nokia reins.

Regardless, the outcome is probably the best Nokia stakeholders could wish for. No longer the world leader in mobile phone technology or sales, the company that rose from humble beginnings in pulp mills and making rubber boots for fishermen, has seen it all. By the time Elop arrived the writing was already on the wall and his burning oil platform analogy was hauntingly accurate.

The company had previously refused to accept that mobile phone upstart Apple could upset its own cart (no pun intended). It thought smartphones were expensive and the market was limited. Nokia’s favoured operating system, Symbian, had served it well and was under continuous development. However, it was not quite enough to match the onslaught of iOS and Android.

The decision to go exclusively with Microsoft Windows Phone was debated by all and sundry outside of Nokia. Elop used the argument that going Android would have made it just like every other manufacturer. The differentiator was to be Windows Phone and we can only imagine now just how good the stunning Lumia range might have been with Android powering it.

Not that there is anything glaringly wrong with Windows Phone, it just hasn’t captured the imagination or wallets of smartphone buyers. Was it because there was only one predominant handset maker, Nokia, pushing it? Now that others like HTC and Huawei have joined in, will it start to take off or will they be disillusioned at having to compete directly with the new Microsoft unit selling hardware against them?

This is a bold, yet necessary move for Microsoft. The demise of Nokia would have certainly been and embarrassment, even the death knell of Windows Phone. Microsoft needed to get a much firmer grip on the mobile boom, and it needed to protect the investment it had already made in Nokia with early advances. The deal covers both.

But, harking back to my opening point - was it all too obvious? Microsoft man goes to Nokia, Nokia goes exclusively Microsoft, Microsoft buys out Nokia and Microsoft man goes back home to take on a lesser role heading up its mobile division. Was that a demotion or reward for a job well done? If we are to believe reports that Elop was hardly involved in the acquisition talks was it to protect him, and the two companies, from any claims by conspiracy theorists?

We now have to wait and see what impact this will have on the mobile phone industry. If we are to believe our good friends at Light Reading, and the results of a recent poll they undertook, in a year has already seen its fair share of game-changing acquisitions, none will have as much impact as this one. However, with just over a third of the 177 respondents thinking so, it is hardly worth shouting about. Had a much larger sampling been asked if the impact would be positive, or not, perhaps the results may have been a lot more interesting.

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