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Microsoft buys Nokia mobile

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MNLast week in Thoughts on the future of Microsoft post Ballmer I said that my only ‘surprise’ at the announcement was that it hadn’t happened years ago.

This morning Microsoft announced that it was buying Nokia’s mobile unit and associated patents for $7.2b. Given that Microsoft paid $8.5b for Skype in 2011, that price seems extremely reasonable. 32,000 Nokia employees will transfer to Microsoft. Nokia now becomes ‘just’ a telecomms equipment company. Interestingly, Nokia’s CEO Stephen Elop will return to Microsoft as head of their Devices and Services business. Elop (amazingly) has been suggested as the frontrunner to take over from Ballmer.

Any reader of HotViews will know that we have been signalling this takeover for years. See Nokia slips into icy waters and work back... Our only ‘surprise’ now is the timing of the announcement.  For such a big deal to come just days after Ballmer stood down seems mighty strange.

Does the deal make sense?

The future (well, actually ‘the present’) is mobile and Microsoft has failed to engage in that crucial market so far. Nokia had nailed its flag to the Microsoft mast. From the largest global supplier of mobile phones, Nokia had sunk to a very poor also ran. From the largest supplier of PC software, Microsoft is a poor also ran in mobile. So, in one sense, Microsoft needed Nokia as much as Nokia needed Microsoft. But, in that age old jibe, ‘tying two bricks together doesn’t make them float’.

On the plus side, there is undoubtedly a market opportunity (as I said in Thoughts on the future of Microsoft post Ballmer) for the creation of a provider of mobile solutions for the enterprise. For example:

- taking Office onto various mobile platforms.

- providing secure emailing in a sector once occupied by Blackberry.

- providing all the social MyTop stuff for the Enterprise as Facebook has so successfully done for consumers.

Of course, the risk is that Microsoft will alienate all the other hardware vendors. Microsoft’s success over the last 30 years had been built on being agnostic. Its software powered Dell, HP and a squillion other hardware platforms. How will they now regard a Microsoft with a substantial hardware wing?

But, on balance, Microsoft needed to make a bold move into mobile. Not doing so would mean certain terminal decline. This way at least holds out some chance of survival.

Footnote - We debated the right headline for this story. I had considered Microsoft lifeboat rescues drowning Nokia from sea after jumping from burning platform. It was not only too long but also gave rise to the question 'who was rescuing who?'


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