Originally published on the 3rd of September 2013.
The Microsoft/Nokia deal visualized.
Luke Millar (@ltm) September 3, 2013
When I saw the news about Microsoft Acquiring Nokia Devices and Services this morning my initial reaction was one of confusion, why would one loser acquire another loser? It seems that others had the same thought as well.
However as I digest this more I’m starting to think that this was part of a larger piece of chess where Nokia has realised for some time that the writing was on the wall for their devices as Android and iOS were busy carving up their formidable market share.
Nokia and RIM, who once dominated the smartphone market have been in a steady decline for quite some time:
It seems RIM’s attempt to get out of the funk was the BlackBerry 10 OS which hasn’t really worked out too well for them. Nokia on the other hand seemed to take a different strategy, realising their ancient Symbian OS was a pile of dung they decided to do a an about-face and join with Microsoft and move all their phones onto Windows. Earlier this year this move was completed and the last Symbian device shipped was in mid-2012.
So basically Nokia killed Symbian, cut all the costs out of its business from rolling it’s own OS and focused on Windows devices and profitability of the devices division which it has achieved. They even sold off their headquarters and leased it back! And the goal of all this — to inflate the price of Nokia Devices so that they could make a strategic exit by selling to Microsoft.
This plan has clearly been in the making for a very long time and my hat goes off to what I think is a genius move by Nokia to offload a struggling division that once defined the company so that they can once again reinvent themselves — which given they are Finnish and have a lot of Sisu I’m sure they will do.
Microsoft on the other hand have a lot of cash and I think this is a case where Balmer didn’t have much choice but to go along with this move, however I don’t see a bright future for Windows phones — Microsoft needs to be in this market but they haven’t shown they understand it and they are too late in creating an ecosystem. Maybe the next CEO of Microsoft will have a bit more insight and be able to take them somewhere exciting?