Microsoft and Nokia: No Surprises
In a move that has been on the cards since February 2013 (or 2011, depending on who you talk to) Microsoft finally stumped up the cash and bought Nokia’s device business.
This should not come as a surprise.
There is much to be said about this sale, ‘I can’t believe this has happened!’ should not be one of them.
“There isn’t much time left. Think about it, there’s a much larger game at play here”
— Unnamed Nokia source, Nokia World 2011
When Nokia went ‘all in’ with Windows Phone, it was clear that the three main players in our near future of communications were getting geared up for The Big Play.
This was no longer about HTC vs Blackberry vs Samsung vs Nokia; pure hardware battles were now a thing of the past. This was about owning the consumer, from start to finish, and it was clear that the game had changed.
This is Microsoft vs Apple vs Google.
Rewind 900 days or so and the writing was on the wall. The fans knew it, (many of) the employees knew it, and the industry knew it.
— Sample fan reaction Tweet from Feb 11th, 2011 —
I’ll say it again: this should not come as a surprise.
What happens now?
Let’s look at the facts:
Microsoft will pay €3.79 billion to purchase substantially all of Nokia’s Devices & Services business (including both the Lumia and Asha brand and products)
Microsoft will pay €1.65 billion to license Nokia’s patents (Nokia retains its patents, Microsoft gets a 10-year license)
Total price €5.44 billion (transaction is expected to close in the first quarter of 2014)
Nokia gets to keep its patents and, with its device business now gone, the plan is to focus on three core technologies: NSN (its network infrastructure) HERE (its maps and location-based services); and Advanced Technologies (a licensing and development arm).
Microsoft not only gets itself the mobile hardware it so badly desired (let’s face it, the Kin never set any worlds on fire), but it also gets serious talent: in marketing, manufacturing, management, distribution, hardware design – the list goes on.
There is an additional challenge here, for Microsoft, to ensure said talent stays on after the acquisition, but that’s for another day…
And let’s not forget the well-worn road into emerging markets; somewhere that Nokia has excelled in the past and where Microsoft, along with many others, is pinning its hopes for the next billion customers.
“One Brand, United Voice.”
“This is the slide you don’t want to see if you’re a Microsoft OEM.”
I’ll give you a second to scroll back up and take a peek.
It’s important to note that even before this deal was announced, Nokia had cornered nearly 87% of the Windows Phone market. A fact that in itself begs the question: why would any other hardware manufacturer build for Windows Phone?
Post-announcement, Microsoft have made it clear that they want to encourage partners to bring their toys to their eco-system. However, and this is fundamental, Microsoft need to drive serious volume to make that even anywhere near a valuable proposition.
Because right now, it really isn’t… And this is no surprise.
What happens next?
1. Nokia employees around the world are waking up to a new employer. If you know one, give them a call. I’m sure they’d appreciate the words of ‘Good luck!’
2. The best Windows Phone phone to date, the Lumia 1020, will launch globally, in Q4 of this year.
3. Following that, in early 2014, a six-inch Nokia ‘Phablet’ device (rumoured to be called the ‘Lumia 1520′) is expected to launch which could well be the last Nokia smartphone, ever.
4. Debate will rage across the trades about who planned and plotted what and when, and who exactly is now in the top spot to take over from Steve Ballmer when he steps down as Microsoft CEO.
5. In two weeks time, the new iPhone will be announced, and the world will keep on turning.
But there are no surprises here.
It is a sad day indeed. However, if Microsoft’s new ex-Nokia employees can bring half the innovation that they showed when reporting into Espoo, then Redmond should be in for a treat.
Ultimately, one hopes, the consumer will win out.
And that would be a nice surprise.