Microsoft purchases Nokia’s phone business

Steve Ballmer’s last trick

It is not exactly surprising that
Microsoft purchased Nokia’s phone business, as both companies have been
collaborating since 2011 when Nokia replaced its proprietary operating
system with Windows.

Microsoft, having dominated the software
market for 40 years, has also missed the digital media revolution of
the past decade. Apple flew by and its own answers to the iPod, iPhone
and iPad failed miserably. CEO Steve Ballmer, successor to the legendary
Bill Gates, announced a large restructuring in July, reorganizing the
company on two pillars: devices and (internet) services, in order to
launch products quicker. Microsoft also wants to be able to launch a
software platform more quickly, in order to compete with Apple (and its
iOS) and Samsung (with Android).

The acquisition of Nokia’s
phone business and its patents fits perfectly into that strategy and is
considered to be Steve Ballmer’s last trick, as he had announced his
retirement at the end of August.

Exit CEO Stephen Elop

The
sale coincides with the end of Stephen Elop’s reign as Nokia CEO. The
Canadian moved from Microsoft to Nokia in 2010 and immediately hit the
nail on the head in a leaked memo, causing a lot of controversy: “The
first iPhone shipped in 2007, and we still don’t have a product that is
close to their experience.[…]Unbelievable.” Interesting detail is that
Stephen Elop is one of the possible successors of Steve Ballmer at
Microsoft. His temporary replacement at Nokia is current chairman Risto
Siilasmaa.

Nokia’s phone activities still generate a turnover
of 14.9 billion euro (19.6 billion dollars), representing nearly half
of Nokia’s net sales of 2012. The deal with Microsoft should be taken
care of in the first quarter of 2014, after share holders and antitrust
authorities have green-lit the deal.

“Change and reinvention for Nokia”

Nokia
will now refocus on three central activitites: networking devices and
services (through NSN), navigation and maps (through HERE) and the
development of new technologies and licences (through Advanced
Technologies). For that purpose, Nokia bought Siemens’ 50 % stake in
their joint venture in August. Nokia now fully owns Nokia Siemens
Networks, specializing in broad band networks.

“Today is an
important moment of change and reinvention for Nokia and its employees”,
Nokia stated in its official announcement, a repetition of history for
the Finnish company. Up until the nineties, Nokia was a conglomerate
doing all kind of things, from paper production, to tyres, television
and mobile phones. The 148-year-old company then decided to cut off all
activities to solely focus on the production of cell phones.