Nokia, one of the giants of the early mobile phone system is to be bought, at least in part by Microsoft. The deal will be worth 5.4bn euros ( that’s $7.2bn or £4.6bn) and will complete by early 2014. Microsoft will receive all of Nokia’s manufacturing arms, a licence to patents for 10 years and a number of other rights on Nokia properties. Over 32,000 people will transfer from being Nokia to Microsoft employees.
So what does this mean from a consumer point of view?
The most obvious change will be that Nokia smartphones as a brand will disappear from the market. Microsoft has bought the Lumia (smartphone) and Asha (mid-range phone) trademarks but they have not bought the rights to making Nokia phones and Nokia has agreed to keep out of the smart phone market.
Microsoft will join the select ranks of Blackberry and Apple (and arguably Google) as a company that makes an entire mobile phone system. This would include control of hardware, software and OS design and manufacturing. Apple has managed to make this end to end development work and Blackberry has been less successful with it recently but we will have to wait and see if Microsoft manages to make it work.
Windows Phone as an operating system is to be pushed even more with Microsoft aiming to expand its market share from around 4 percent today worldwide to around 15 percent by 2018. Microsoft has a lot of money to throw at the problem and can now take control of its entire ecosystem so this might not be impossible but it is a very ambitious target. Windows Phone will still be available from other manufacturers and Microsoft has gone out of its way to try and reassure them but this will be a big worry for them.
Nokia will be a much changed company after the deal goes through. They are best known for their device manufacturing but
Nokia plans to focus on its three established businesses, each of which is a leader in enabling mobility in its respective market segment: NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing.
They will have lost around half of their workforce worldwide with around 24,000 staff remaining, still based majority in Finland. Nokia’s stock price went up almost 40 percent on the news and the cash going to Nokia should fix all its debts and put it on a good financial footing longer term.