Microsoft’s influence on Nokia now said to be less than before acquisition deal

Although the Microsoft / Nokia agreement announced early last month caused shockwaves in the industry, many analysts have rightly been cautious about the acquisition of Nokia’s hardware division. That’s because the deal has not been finalized nor approved, by anyone, and the process is not expected to be completed until early 2014.

The question on many minds though, including our own, is what are things like now between the two companies? One stream of thought is that Microsoft and Nokia are going forward, working on devices, and that they have begun to merge divisions, knocking down those barriers that Belfiore referred to in an interview with CNET. Better phones, more exciting software, right?

However, Hal Berenson, a retired Distinguished Engineer and General Manager at Microsoft, says it is just the opposite. In an insightful blog post he notes that Microsoft is having little to no influence on anything Nokia is doing right now—in fact, it probably has less power than before the deal was announced.

The reason? Anti-trust law. The companies can plan, but they cannot execute.

According to Berenson, both companies must act like the deal won’t go forward. Therefore, any direction Microsoft might give Nokia on new hardware, like the rumored Lumia 2520 tablet, could be seen as collusion should the acquisition be denied.  Both companies need to be on their best behavior during these next few months, operating as independent businesses, while regulatory agencies pore over every aspect of the two massive organizations. Berenson goes on:

“Even some activities that the two were pursuing, or planning to pursue going into the launch of GDR3 or even WP8.1, might get scaled back as lawyers advise that they might now invite regulatory scrutiny.”

So while product lines and advancements between the two companies will be intriguing after the deal is approved, don’t expect much during these next few months. Berenson adds that this may be why Nokia can’t cancel the Lumia 2520, even if it seemingly clashes with Microsoft’s Surface 2 plans.

That’s important because of sensational articles like those found recently on Bloomberg, who wrote a report titled “Microsoft’s $7.2 Billion Nokia Bet Not Luring Apps”. The announced deal, which was barely 30-days old at the time, evidently warranted an early evaluation by Bloomberg on its success. In the trash piece, Bloomberg feigns research by interviewing “a dozen developers” and concluding “Microsoft Corp. (MSFT)’s $7.2 billion pairing with Nokia Oyj (NOK)’s handset business is failing to win over the software developers who are crucial to its success.”

The article didn’t even bother to consider the impact of BlackBerry imploding, but evidently a non-approved acquisition with no material impact was fair game.

Make no mistake, the real story between Nokia and Microsoft has not begun. So while some developers may not be “convinced”, we’re not exactly sure what they are using to evaluate the deal, since literally nothing has come of it yet.

Microsoft and Nokia have made huge strides with Windows Phone in 2013, but the real story of Microsoft’s acquisition of Nokia’s hardware division won’t happen until mid-2014. Anyone who tells you otherwise, is full of it.

Source: Hal's (Im)Perfect Vision; Bloomberg

Daniel Rubino

Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been here covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, Microsoft Surface, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics and ran the projectors at movie theaters, which has done absolutely nothing for his career.

  • Hey a 521 in the picture! Nice to see that for a change.
  • Really -_- ??
  • Yeah, check the god damn market share numbers that the 500 line has produced, you want to talk hero device status yet???
  • At least he didn't say "FIRST!!!"
  • Hahahaha, indeed!
  • I'm hoping all goes through simply cuz I would hate to see android on beautiful Nokia hardware.
  • If it goes through, you won't see beautiful Nokia hardware anymore. You do know that, right?
  • It's not the name that matters on the device, it's the team behind it.
  • To some people who grew up with Nokia, the name matters alot.
    I won't be disappointed if the deal doesn't go through, and I am a strong MS/WP supporter.
  • The deal will go through. Virtually no chance it won't.
  • I hope so too I could only image Nokia/ms phones using Ms money =bad ass phone! Not that there not already but they will be even better
  • "virtually".
    In reality, there're some chances it will. (Let us all remember that the entire Elop-action may also fall under investigation...and Europe isn't the US. CEO's can't do whatever they want)
  • I hope the deal doesn't go through. I really don't want to see Nokia and its name exit from the market. After all, I've had 11 or 12 Nokias over the past decade.
  • while I respect that you are a strong supporter of WP, and hate to inform all of the members who continually boast about the loyal Nokia supporters who purchase basically because of the name alone, "I wish all of these supporter would purchase an recommend Nokia's WP to all of their friends & family members". No disrespect to them, but if they were such a large crowd, then WP would be making headway and Nokia would not have been looking to sell the devices division.
  • Many Nokia fans left the company the day Nokia went with WP instead of Android. Others will go the day Nokia disappears. That's the harsh truth.
    Windows Phone's chances of growth were/are way better if Nokia doesn't get swallowed by MS.
  • That's not true. Eaowxiallh since they had been eyeing android as a backup OS. If the deal doesn't go throw, Nokia could very well become like HTC and Samsung with splitting their efforts between android and windows phone.
  • So they were happy to use Symbian or MeeGo but spat the dummy because they couldn't get android? Doesn't make sense
  • My first phone was a nokia with Cingular (Now AT&T)
  • Not really. Remember Sony Ericsson. I do not think so that they lost fans. For me personally when I see Sony handset voice behind the scenes ads Ericsson. Same will be with Nokia. I will be using MS phone and will always remember Nokia behind it.
  • Correct me if I'm wrong but, I think I read somewhere that Microsoft bought only the devices department of Nokia and not the R&D department, where all the great Lumia tech comes from like OIS
  • Correction: Microsoft bought "Devices and Services" division. This would include the R&D department involved with hardware. What Microsoft didnt buy was the part of Nokia responsible for mapping technologies, as well as NSN (Nokia Solutions Network, formerly Nokia-Seimens network {if im not mistaken.}). So the aquisition is similar to Google's aquisition of Motorola, where google aquired Moto's Devices & Services division and everything there in, and what was left was Motorola Solutions.
  • Ahh good to hear that. Thanks For clarifying :)
  • Actually MS will not be buying the division in-charge of the camera hardware. But Nokia will licence them the patents.
  • source? as far as im aware the division responsible for imaging is grouped under the devices part of "Devices and Services"., and it was the mapping technology being licensed.
  • I don't know whats grouped under what but Ms isn't buying any of the patents they are just licensing them. And and as far God gave me some sense all techs including ois and pureview comes under Nokia (the un-trojaned). Here is your source coz I you are so much of a fanboy not to google FYI : nokia can again make their own phone (the smart one's) even if the deal go through but only after 2015. You can apply some water on that burn.
  • What burn? I never said anything about patents, and I do Google from time to time. And that comment about Nokia can "again" make their own phone ("the smart ones"), implications that Nokia hasn't made a smartphone aside, sounds like you're outright stating that Nokia's current offerings are not true smart phones, thus making you appear as another Google (or apple) fanboy &/or WP hater. The patents may be under Nokia, but the actual team and people designing those technologies, from what I read, is a whole 'nother ballpark.
  • Nokia has multiple R&D divisions, some are transfered to MS, but the ones resposible for future tech remain at Nokia. Not sure where PureView -stuff would land, hw team might stay with Nokia, while sw might move to MS. No idea who owns the actual patents now, but I hope they stay with Nokia (and will be licenced to other vendors from next year onwards).
    Get your facts right
    FYI: NOKIA can still make thier phones after 2015.
  • ?
  • But " The team" will be subjected to the decision of a much different upper echelon.... if the deal will go through.
  • Name matters a lot. Specially in markets like Europe. The name "Nokia" alone sells. There's no way around that.
    As for the team...they would need to accept the transfer. Seeing that the designer of the Lumia line has already left the building...
  • I agree with you, DJCBS - The Nokia brand name matters alot. While I've personally had my eye on WP since 2010, there was no oem worth my money, until Nokia started making WP devices. It will be interesting to see how Lumia devices sell without the Nokia brand on future devices.
  • Yes, but why does the name matter so much?  Because the Nokia team makes great hardware.  So if the same team is still making the same great hardware, aren't consumers smart enough to understand that even under the Microsoft banner they're still getting the same great hardware that they got from Nokia? The only reason I could see people abandoning the hardware over this is if they want to make some kind of a protest statement, but not because the quality is suddenly diminished.
  • Or they just won't know that Nokia people still make the MS hw. The name drop will surely be a negative to sales, at least initially.
  • Name matters and specially here in developing countriea i.e India. Some 5 years ago some people only knew phones by the Name Nokia till know those people doesn't even know what Ms is. And when they heared Ms is going to buy Nokia you know what image did the Ms posesed a evil image. So I can give you some assurance most people ain't gona buy that thing. Nokia meant faith to us we still buy their phones not the expensive one's because they ain't worth the money software wise its what most of the Indians think thats why they buy expensive Android. And to all the fanboy's here(me too nokia) or those who want to look different chosing a niche Os because thay don't have anything much of a different in them to look so this Os ain't going to be successful if deal goes through believe me Android is much better give it a try. I have and am more than happy about it.
    And btw China and India are 2nd and 3rd largest phone markets and I dont think anybody would want to ignore them.
  • While in Asia Nokia name means a dying brand or cheap phone company. Nokia is coming back because of Windows. Android is the king here with big name like Samsung HTC and many fierce local company. Yes the name will sell but not Nokia.
  • You know nothing about Asia. Coz you aren't from Asia.
  • sorry but Nokia Branding is HUGE everywhere.
    people always call my phone a Nokia not windows phone. just like samsung.
    and what now ? Does this mean that Nokia could in fact still release a low end android phone . if they need to act like the deal is not going to happen ?
  • +1
  • No, you'll see beautiful Microsoft hardware, design by, basically, Nokia.
  • Maybe what they could do is replace Lumia with Nokia, so you would have something like the Windows Nokia 920
  • No, because ms didn't buy nokia, they bought the devices and services division.
  • If it doesn't go through you still won't see much new Nokia hardware anymore. They will be DoA within a year Android or not..
  • More like horrible speculation!
  • Call it what you will. I'm not saying I want to see the deal fall through. I have money invested in both companies and would stand to loose a bundle.
  • Warrantless speculation.
  • If the deal doesn't go through, you will not only not see the name anymore, you won't see the hardware as well. Nokia will either go bankrupt or will be acquired by one of the chinese companies. Microsoft's money was the only thing that kept Nokia from following blackberry.
  • You are right! I just hope the deal is not happening and Nokia is still independent. I love Nokia
  • Some bitter former Nokia bigwig is so incensed with Nokia being exclusive to Windows Phone and not Android that he created "Newkia" with intent on Nokia quality for the Android OS. How's that for bitterness?
  • I call that smartness. In case you're unaware, the large majority of Nokia fans wanted Nokia to go with Android and not WP. If Nokia is destroyed because of this deal, you can't blame someone for trying to capitalize from the unhappy customers, can you? ;)
  • LOL at those unhappy customers buying newkia, if they were such loyal customers then Nokia would not be in a position to sell their Devices division.
  • You know very well why Nokia is in the position of selling the Devices division. It has a name: Eflop. And you know it.
    (Also...I don't believe that "Newkia" will go anywhere. Just like WP without Nokia, Newkia lacks the consumer trust Nokia gained over the years. These things don't work only against Microsoft.)
  • Stop your delusional conspiracy theories and face the reality, no amount of hating will stop Nokia-Microsoft deal :)
  • Do you have any evidence, or are you just saying something?
    Android and Nokia is NOT a good combination. Nokia is design hardware, with quality. Android does not fit in there, because of it's messy ecosystem, UI, image etc. I am a Nokia fan since the 3310, and I would HATE them if they ever switch to something so generic and messy as Android!
  • That's because Nokia is like a president in his second term. "WHAT NOW?! YOU ALL CANT STOP ME *flips the bird*"
  • LMFAO!
  • Actually, it's usually the other way around, especially in the final year. That's why they call him a lame duck president. He doesn't have to worry about re-election, but the congress does. So, usually he can't get anything done in that final year.
  • I used to read Bloomberg but they are really bad journalist or analyst for that matter; I wonder how they still have readers.
  • I agree. Bloomberg is a joke in the business world. Mostly just read by market wannabes. They have to give away their journal now - I get at least one offer a month from them for a free subscription. It's pathetic.
  • Thats Scary in a way. When you take over a company or a piece of one unless there is something in writing you (the company) should pretty much have final say. What are we missing with this story or just not being brought to light?
  • Not sure you read the article close enough. Microsoft has not taken over anything from Nokia. Literally zero. It needs approval from shareholders, regulatory agencies, etc.  In the meantime, MS cannot give influence to Nokia because if the deal is denied--for whatever reason--then Nokia had an unfair advantage over its competitors. Get it?
  • My specific hope is that this anti-trust worry doesn't work against what they were already doing together. The whole special relationship and all.
  • Does that mean projects already in the pipe line can't be continued or expanded upon. If you have ever used an outhouse, you know the smell that this is starting to put into the wind.
  • Mr. Rubino
    Love it when you get involved in our post, gets us all excited! I read the article and the previous ones too & I understand nothing is final yet I was just commenting as if everything was said and done. I didn’t think of it as an "unfair advantage" based on their business relationship but its business and your correct. 
    I heard you when you mumbled "no rebel rouser post on my articles
  • np, didn't mean to sound snarky ;)
  • As a Nokia investor and a Lumia 928 owner. I have voted YES with my shares to have the deal go through. I believe in Nokia and put my money at risk and, so far, have been handsomely rewarded for my risk. I think the divestiture of the D&S division of Nokia will allow Wall Street to eliminate their Android and Apple bias against Nokia and allow the company's stock to continue to appreciate to fair value.
    MSFT realizes how important the Nokia build quality is to the success of WP8 (much like Apple's high build quality and design has built the iPhone empire) and with the entire Nokia team onboard, I would expect that we will continue to see killer WP8 devices coming from MSFT and that WP8 will continue to grow in the smartphone arena and eventually takeover iOS.
    The new Nokia looks to become more aggressive in the licensing of their Patents and the monetization of their HERE brands. I also believe that they are going to start making a big splash with accessories (smartwatches, location tags, etc). These accessories should fall outside of D&S imo.
    There are still exciting things coming from NOK in the future.
  • Thx for clarifying
  • Microsoft hasn't bought anything yet. They came into an agreement to buy for certain price, but the deal is several months away from being finalized. Right now they are not allowed to take control over Nokia because if they do, sale will be denied. At this moment, they are still 2 different companies.
  • Not sure why that would be the case, MS doesnt own that nokia department at this very moment, so there isn't any reason why MS would have final say.  They can collaberate as they been doing, business and usual, but they will probably stand back for now so they dont ruffle any reglulatory feathers. 
    Remembe when ATT and Tmobile merged?  So what you are saying ATT should of been able to make decisions for Tmobile even before the merger approved, guess what?  The merger failed so if ATT would of had final say and make whole sale changes in the months prior to the denial assuming the merger would of gotten approved,  It would of been a big mess. 
    Also, if MS had final say before even owning the division, not very fair for HTC and Samsung (not like they care anyway)
    Can't assume this will go through, would i bet it will? Yes i would, but this needs to go through the proper process before actually making the decisions for another company. 
  • Watch it get denied.. MS always gets screwed.
  • But not Scroogled?
  • I hope it fails!
  • Why?
  • So Microsoft doesn't kill the Nokia name.
  • For the 900th time, Nokia name will NOT be wiped out.
    Nokia will still be disp. On feature phones. R&D, mapping, and communications will still be under nokia's name, with some patents "rented" from Nokia for 10yrs by MS.
    sorry for reaction but I have to correct. :P
  • Oh yeah, you're right! I must have skipped that explanation every time I read about the acquisition over the past few weeks! /s
    I know exactly what Microsoft is purchasing with the acquisition, and the Nokia name will no longer be on high end devices. I know Nokia will continue to operate as a stand alone company, but Nokia themselves will no longer be producing devices. That is the reason why I don't want the acquisition to go through. I want "Nokia, by Nokia", not "Nokia, by Microsoft".
  • " I want "Nokia, by Nokia", not "Nokia, by Microsoft". sometimes, change is good. Maybe this will start a new golden age for MS and Nokia.
    from what I've heard, nokia's devices was not profitable enough in the future to justify the branch. MS "saved" Nokia by buying it rather than google or apple, etc.
  • to reply to your other comment,
    "Oh yeah, you're right! I must have skipped that explanation every time I read about the acquisition over the past few weeks!...I want "Nokia, by Nokia", not "Nokia, by Microsoft"."
    just elaborate more from your first comment, that way I know. Haven't seen you before in the comments, thought you came in just for an article or two. ;)
  • Sorry to crush your dreams buddy. There is virtually no chance that it will get denied. The shareholders are more than happy with the skyrocketing stocks now because of the acquisition.
  • I don't want it to get denied. I want it to go through...
  • As far as i know. Nokia needs the money to help pay for the NSN acquisition. So they need to push trough or Nokia will be doomed.
  • Delay in 8.1 WP hopefully not
  • Bloomberg is full of it. It hasn't even been long enough since Microsoft announced their intention to buy Nokia, plus they aren't even thinking of the worldwide wide gains WP has made and only of the US. On top of that we haven't seen the new things coming out of Nokia's final independent event. Once MS and Nokia can make their first move together I'm sure developers will be at the very least interested in the new hardware.
  • Developers won't be interested in the hardware just because of the merger. The only thing that interests major developers is the OS marketshare. If WP stays the same, developers will stay away from it. If marketshare increases over the next 12 months, developers will come.
  • While I don't disagree with your point I think that nice hardware could be enough to attract *interest* to the platform. As WP and WinRT converge those who have worked on Apps for Windows 8 will have less of a hurdle to get into the market.
  • They could be basing the analysis on Nokia's own proxy materials. If you read them, Nokia makes very clear that there's the possibility that, if the acquisition goes forward, their current and future clients and customers will lose trust not only in Nokia but in the entire system around it.
    Let's face it: the deal is only good to Microsoft in the US. And in what concerns the acquisition of a D&S division without bothering to build one from scratch. From the Nokia side, there's little to almost nothing to be gained. They receive money. However, as Nokia herself admits, there's zero warranty that they'll even be able to go on if the D&S goes away.
    Then there's the consumer point of view. If Nokia goes, there's a really big chance that current Nokia Lumia owners will not continue with Windows Phone. Why? The lack of OS development is a factor (albeit hopefully minor once 2014 arrives) but the lack of Apps is another. It's more than the lack of Instagram. It's about making sure they get all the hip Apps at the same time as other platforms.
    Without Apps and without the brand people trust - Nokia - they'll simply go away to more trendy OEM's and OS's (being Apple and Samsung the ones who benefit from this). Nokia also admits that as a risk to their shareholders. And it's a real risk, specially in the European market. And if the customers go...well, obviously the developers will also not be going to "waste" their time developing for a platform that albeit being the 3rd place, is still a small 3rd place, with prospects of growing smaller (and the implosion of BB will probably not benefit WP enough)
    As for the amount of current influence of Microsoft on Nokia...yeah, sure. They'll be more careful now. But I'm pretty sure Microsoft will still try to boss around, even if very very discreetly.
  • "They could be basing the analysis on Nokia's own proxy materials."
    That's exactly what they didn't do. And Nokia's hardware business was thought to be unsustainable in a few more quarters--they would have run out of cash and either gone belly up or been bought out. Microsoft had to buy them to save them in the long term.
  • Precisely. Nokia has everything to gain, as do the shareholders (stock is hovering around $7 today, over 100% increase since the announcement). The deal fails, the stock plummets and Nokia will basically be parted out like an old DC-10 in the Arizona desert. As both an employee and shareholder, I sure won't vote against the deal. I am liking my newfound liquidity. :)
  • I hope you're an employee of the D&S division of Nokia. Otherwise I urge you to start looking at other jobs if the deal goes through. And...sell your shares now. Whatever the outcome of this is, your shares will go down.
  • Yes, by all means, take job and financial advice from random, anonymous strangers on the internet named 'DJCBS'. Sound advice! LMAO
  • Sure, don't take it. What do I care, I'm not the one with my job jeopardized...LMAO
  • the remainder of nokia (HERE, the r&d and the patents) is the PROFITABLE part of nokia. why jump ship from a company which is profitable and just recieved 7bilion dollars?
  • For something to be profitable, they need clients to whom sell their services. And lets say, prospects aren't nice.
  • Well probably thats the reason Nokia was considering an Android phone and surely a Nokia android phone would have matched sales figures of an iphone or SGS3 and the it would have brought in the required cash as well as bumped the share up but MS would have lost WP forever which is exactly they were forced to buy nokia, isnt it?
    A good amount of WP users (excluding US) bought a Nokia and not a WP. I'm quite unsure what are MS plans currently but if it lets go of Nokia's name on the device surely it would affect sales in EU/SE Asia. The reason 520 is success in countries like India is because most ppl buying then come from years of using Nokias and are mostly first time smartphone users or symbian converts.
  • surely a Nokia android phone would have matched sales figures of an iphone or SGS3...
    What evidence is there of that?  That is like me saying "Surely a nicely designed phone like the HTC One will match sales figures of an iPhone or SGS3" - before we knew that didn't happen. 
    There is simply no evidence that Nokia would have been sucessful at Android, and I would say there is more evidence that they would not have been - every other Android vendor that is not Samsung... Unfortunately/Forunately (eye of the beholder), we will most likely never know.
  • Dear American friend:
    Do not evaluate things based in the US scenario. In Europe, unlike the US, Nokia was (and still is in some countries) the biggest phone OEM. The Nokia brand alone has a long tradition of quality.
    The reason why Nokia lost the smartphone-train was tardiness and the choice of a less popular OS. When Nokia turned to smartphones, Android was already on the market and was already a very popular OS. The most logical option would have been to join the most popular OS on the market - Android - with the most popular OEM - Nokia.
    That didn't happened. So people started to look for other options. That's when Samsung came along. But believe me, if you do a market search next to Samsung-users in Europe and ask something like:  "If Nokia produced phones with Android, would you buy them or remain with Samsung?" the majority of answers would be in favour of Nokia.
    Nokia lives in the memory of every phone user in Europe, even if some or many of them have moved away. They did it not because Nokia's hardware was bad. They did it because the software was obsolete. The choice of Windows Phone didn't helped changing that perception. While it gained back some users who had left, the OS itself kept away and drove away others.
    Nokia devices with Android would have high changes of making Samsung's reign - at least in Europe - start to crumble. Eflop decided to go another course. And now here we are.
  • Also the big US has no clue who Nokia is. Sony, well known brand so far is having a hard time penetrating the US with their Android phones. I bet if Nokia went Android, they'd financially crash.
  • if you are comparing Nokia ti HTC then you simply donot have any idea of Nokia's popularity, outside US
  • Why the hell you don't understand there is a world outside USA and believe me you know nothing about the other part of the world and sure Daniel also don't know about it and my fellow American you don't know a thing about Nokia as well. You may have been fan of Windows phone for year or a two but in the alien part of the world there are people whose inspiration is Nokia itself following it for almoat 15 yrs. If my mom asks me for a hone I know it can't be other than Nokia. People have started their career writing about tech just bcoz of Nokia. But I know you people can't understand I I don't expect it from umericans who gets more exicted about miley cyrus going nude rather than Syria getting bombed by USA to stop a war. How ironical.
  • Ironical?? Just FYI, my first 3 cell phones were Nokias, back in the mid-late 90s, when Nokia ruled global market share. You have no idea what I know or who I am. I guess when you don't have facts, just start screaming nonsense. Bombing Syria and Miley....Really?
  • And you still stand here and comparing Nokia and Htc for a scenario. And btw in india evrybody's first phone was a Nokia and count may go beyond it.
  • Except they're not really saving anything, are they? They're basically r