This morning we woke up to the news that Microsoft had decided to buy the mobile and smartphone division of Nokia:
There were rumours, there were predictions, and there were numbers, lots of them. However, the simple fact of the matter is that Microsoft have not bought all of NOKIA. The unit that produces base stations (Nokia Siemens Networks) as well as the HERE division (mapping software by Nokia) still exist under the Nokia name badge, and that means that the next mobile produced by Nokia will not be able to sell under the Nokia badge. Instead, we will probably see the Lumia name carry on, as well as the Microsoft name make itself known once again.
Simple fact of the matter is that Nokia have not been doing too well in the last few years. Since the advent of the iPhone, Nokia has struggled to keep up. Their love affair with Symbian kept them behind the curve, and the Microsoft partnership to jump on the Windows Phone bandwagon with the Lumia brand came a bit too late.
I looked at the Nokia accounts, in 2012 the ‘devices and services’ division being sold to Microsoft made an operating loss of 1.1 billion euros, a 34% drop from 2011 when they made 884 million euros profit.
He continues, based on the following report:
“… their summary says that the devices and services division made a recovery, even if they predict it to make a 2% loss in Q3 2013
The Lumia series seems to be making lots of money, they say “we expect that our new Lumia products will drive a significant part of our Smart Devices revenue” in the third quarter.
So things had been bad, but they were starting to look better recently.
So, is Microsoft trying to ‘strike while the iron is hot’, or are they simply sending a very strong message to all the competitors out there? Or is this a sign of things to come. Kate O’Flaherty, a free lance writer who often writes for the likes of TechRadar, had the following to say:
“The deal was always on the cards after Nokia and Microsoft agreed to partner in 2011; and it is part of wider consolidation in the market. Since the launch of the first iPhone and subsequently, multiple operating systems and smartphones, the mobile space has become fragmented. At the same time, device manufacturers who were doing well seven years ago are beginning to suffer. We have already seen Google buy Motorola and after this deal, it’s only a matter of time before BlackBerry – and others – are also acquired or agree mergers.”
You can find out more about her, and read her full thoughts on the subject here:
So what does all this mean?
First of all, I think the one company that has the most to learn from this is Blackberry. Yeah, they are already up for sale, but they need to take some drastic actions soon, or they might actually disappear, which will be a sad thing for many tech fans.
Secondly, and while this may just be a red herring, but this news may also have been timed to be released just before the IFA event in Berlin, and try to put a dent in Samsung’s revolutionary entry to the SmartWatch market space, with the Galaxy Gear. This not only takes some attention away from the Galaxy Gear, but it also makes a strong statement. Microsoft ARE serious about hardware, and they are willing to take all actions necessary to prove it, and succeed in that domain.
Third, and this is probably the most exciting element. Microsoft Surface, and the sort will now have the backing of some top Nokia engineers. This means that we should start to see some good tablets (and maybe even computers/laptops/ultrabooks) from the Microsoft brand in a couple of years time.
What about Nokia though? Are they losing out? If you look at the money offered, perhaps, since they have managed to get less than what Skype did earlier this year. Having said that, the transition seems to be a good one. Nokia’s offices, factories, and everything else remains the same, and it seems that it will be a mere change in letterheads for a lot of the employees.
Another thing to come out of this is the fact that Elop, who left Microsoft to join Nokia two years ago is now the prime ‘suspect’ to replace Steve Ballmer. I can almost hear someone in the background yell: “Love it when a plan comes together”.
All this does make me wonder about Jolla, the spin-off from the Symbian team, who are working hard to produce their own Smartphone OS as well as hardware, comprising mainly of old Nokia engineers. Did they see this coming, and wanted full control. Or was this all just good timing for them? Or, would this move have actually stopped them from going down the Jolla route?
Time will tell, I guess. It all comes down to the fact what the loss of the Nokia brand will do to the mobiles phones created by Microsoft, not to mention the upcoming Asha range.