Microsoft buys Nokia mobile business

[Big Kev]

Interesting....



Microsoft has agreed a deal to buy Nokia's mobile phone business for 5.4bn euros ($7.2bn; £4.6bn).

Nokia will also license its patents and mapping services to Microsoft. Nokia shares jumped 45% on news of the deal.

The purchase is set to be completed in early 2014, when about 32,000 Nokia employees will transfer to Microsoft.

While Nokia has struggled against competition from Samsung and Apple, Microsoft has been criticised for being slow into the mobile market.

[w00dsy]

i can't see this working well for either of them. Unless the Nokia people consider it jumping from a sinking ship and making some cash on the way out. Neither of them have made much of an impact on the smart phone market.

[wabbit]

Very interesting. I guess Elop is in pole position to take Microsoft's CEO role.


2008-10: Elop SVP of Microsoft's Business Division (responsible for Office and Dynamics)
Late 2010: Elop leaves Microsoft to become Nokia's CEO
2011: Nokia announces strategic partnership with Microsoft
2011-13: Nokia's position (smartphones), fell to tenth place
Late 2013: Todays announcement

[wobblysauce]

Wabbit, +1

[Shonky]

Do you think Elop was a plant by Microsoft to reduce the value of Nokia to nothing to make it worth buying for the patent portfolio wabbit?

It makes perfect sense to me that Microsoft would buy Nokia, two companies so far out of touch with the speed of their prospective markets they would be a perfect match to join up and eventually go broke together.

[AstrO]

I've been happy with my Nokia windows phone, although I still get my android fix with my ASUS tablet. Having been with Android phones since version 1.5 and through 3 phones, I have to say I'm enjoying the switch.

PS its an 820

[wabbit]

Do you think Elop was a plant by Microsoft to reduce the value of Nokia to nothing to make it worth buying for the patent portfolio wabbit?

It makes perfect sense to me that Microsoft would buy Nokia, two companies so far out of touch with the speed of their prospective markets they would be a perfect match to join up and eventually go broke together.

Was Elop planted?
I actually think he wasn't (I agree makes for a great rumour mill), I think Elop left Microsoft like a fair few SVPs in recent years because Ballmer effectively forced them out. With no where to go these type of people don't sit still for very long. You've gotta remember these blokes are in the very small percentile that actually live-to-work, rather than like the rest of us that work-to-live. The other blokes names escape me for the moment sorry, regardless they are all extremely talented.

It makes sense...
Effectively "loosely" Microsoft had what they wanted when they forced every new Nokia handset to run Windows Phone OS. That's almost 3 years ago now. Yes they didn't have full control over Nokia but bloody close enough. With yesterdays news, Microsoft like Google are changing their business models where they believe it'll work. Meaning a once only horizontally integrated company now has a section that can be completely vertically integrated (hardware > Software > Services).

Buying Nokia gave them rights to 30,000 patents (might not be exact), talent in the way of employees (eg: engineers) and some would say most importantly time. Time is critical when these big companies change focus. It would have taken a bloody lot longer for Microsoft to build/create their own "Nokia" and without any of the previous benefits mentioned.

[While I'm creating a wall of text... I might just keep going aye]

How did Nokia end up like this?
Put simply they "higher up management, not just previous CEOs" couldn't see the curve jump in time. Yes they were massive, selling 110 million units/year and in the end just 10-ish million. They failed to see what Apple and Google saw... the next curve.

Example of curve jumping:

Originally ice was sold through an ice harvesting business. In the early 1900’s, this meant that Bubba and Junior would go to a frozen lake or a frozen pond during the winter time and physically cut out large blocks of ice. And in 1900 over 900 million pounds of ice was harvested in the USA. Then 33 years later was the beginning of the first curve jump in the ice industry. This was the start of the ice factory era. Operating on the ice factory curve then meant that ice harvesting didn’t have to happen in the winter and it also meant that you didn’t have to be in a cold climate. You could freeze water centrally any time of year and any place you decided to set up an ice factory. And then once the water was frozen in the factory, the ice man would deliver ice to your house or business. So imagine the advantage of going from ice harvester: a cold city in a cold time of year, labour intensive – to moving to an ice factory, any city, any time of year, with dramatically lower labour costs.

Fast forward another 30 years and we move into the second curve jump. The refrigerator ice curve. This becomes ice 3.0 where an ice factory becomes a legacy cost infrastructure. People started to have refrigerators in their own home that could create ice on demand in a matter of hours, with no wastage, at the cost of a small amount of electricity. No need for factories or deliveries to your home when you have a personalised ice factory.

[Shonky]

Interesting wabbs, you've given this a lot more thought than I, and what you say certainly makes sense, I do hope M$ can make it work, a Samsung monopoly is no better than an Apple one or anyone else.

[pixelboy]

Absolutely Elop was planted.. But lets be serious.. Who else would buy Nokia?

I can't see it working out. MS have shown repeatedly that they can't do consumer devices.. Windows Mobile is doomed to be the third player with less than 10% market share for quite some time to come.

Others will come and disturb the smartphone industry but I just can't see it being MS/Nokia.

[markus]

I can't see it working out. MS have shown repeatedly that they can't do consumer devices.. .

Mice, Keyboards, Wheel, Joystick, X-Box, Surface ? Those are all 'can't dos' ?

[r8response]

MS earns more from mobile patent royalties than it does from actual sales of Lumia devices. I don't think they mind being no.3 for the moment.

[wabbit]

Now that it's finally completed, here are some key points


Microsoft...

• Paid $5 billion~ for the Nokia division (renamed to Microsoft Mobile Oy) and 8,500 design patents
• Also paid $2 billion for a 10 year license for 30,000 utility patents, with an option to renew the licenses in perpetuity
• Increased its headcount by 25,000~ (now totalling 126,000 employees)
• Bought the Asha and Lumia brands and will have limited access to the Nokia brand. No announcement on how products will be branded and if the "Microsoft Mobile" name will ever be consumer-facing
• Integration of the two companies is expected to take 18 to 24 months
• Stephen Elop will return as EVP of Microsoft's Devices Group (for Microsoft Mobile, Xbox, Perceptive Pixel, and Surface)

Nokia...

• Will operate its 7,500-person factory in Chennai, India (on Microsoft's behalf) and its South Korean factory
• Continues with three divisions: HERE (mapping and location services), Nokia Solutions and Networks (builds networking and communications infrastructure) and Advanced Technologies (develops and licenses technology)
• Under the terms of the agreement, it's blocked from selling smartphones until 2016.

[wobblysauce]

That last line is interesting.

[Shonky]

Not really wobbly, non-compete clauses are used in very small to very large acquisitions every day.

[pixelboy]

Yes but it's a VERY short non compete period..

[Big Kev]

Microsoft is ditching the Nokia brand name from new devices, less than a year after acquiring the Finnish mobile firm.

New Nokia Lumia smartphones will instead by known as Microsoft Lumia, the company said.

[durbster]

What a strange move, and kind of sad in a way when Nokia were such great innovators.

I still think highly of Nokia as a brand - I think many people have good memories of owning an indestructable Nokia at some point.

It smacks of arrogance if Microsoft think the Nokia name is to blame for their failure to grow in the market.

I'd get rid of whoever's in charge of their god-awful advertising campaigns before I'd ditch the Nokia name.