Skip to main content

What’s the strategic rational in acquiring Nokia? Here’s Microsofts answer

Microsoft just bought Nokia’s hardware division. The tech world is still reeling at the news. We’ve heard from Microsoft why they chose to buy Nokia. And other analysts will surely weight in with their thoughts over the coming hours, days, and weeks as the deal closes. You’ll probably get a nice editorial from Daniel shortly. But in the meantime, why not look over the presentation from Microsoft and Nokia and start forming your own opinions?

Before you go ahead and download the PDF, we figured we’d pull some choice bits from the material. Bullet points on the matter.

  • Microsoft acquires Nokia’s phone business, Nokia’s Qualcomm and other key IP licenses
  • Microsoft licenses Nokia’s patents for use across all Microsoft products and will use Nokia’s HERE in a variety of products
  • Nokia and Windows Phone are outselling Blackberry in 34 markets
  • Microsoft spent 3.79 billion Euros on Nokia’s Devices and Services business alongside key patents
  • Microsoft spent 1.65 billion Euros for a broad intellectual property license
  • Microsoft used offshore cash, will have no impact on ability to return capital to shareholders
  • Stephen Elop steps down as Nokia’s CEO, becomes EVP of Devices
  • Phone device research and development will stay in Finland
  • Much, much more.

Go read the PDF from Microsoft. Link below. This is a lot to take in and we’ll get through this together.

Source: Microsoft (opens in new tab) (PDF)

147 Comments
  • Good news indeed... WP just surpassed IOS❗ This is making WP a lot more popular literally over night... Well, at least it's night here in the US... Lol❕
    Also,, something tells me that this huge news is going to stimulate app development for WP❗
  • Now that they own the Lumia brand, they should name the OS Lumia.
  • That wouldn't make sense if they still plan to let others make WP devices... Think about it.
  • And wouldn't make sense the fact that their phone brand is Lumia. Apple don't call their OS iPhone, its just not logical
  • They used to
  • I bet Microsoft buys BlackBerry next.
  • Wow❕❗❕❗
  • W8 would be the #2 mobile OS and a threat to Android the instant they buy BlackBerry
  • There's still iOS.
  • W8 is chopping at the heels of IOS now. If Microsoft buys BlackBerry they'll leap frog over IOS to a solid 2nd. place.
  • No, just no. As much as id like to agree with you, Microsoft has one major problem which means at current place wont ever catch up to Android - its inability to release worthwhile updates in a timely fashion.
    Heres some perspective: we have only just got the update which showed all the features the OS demoed to us nearly a year ago when they announced the phone. Had that been android, that update would have been out within the month.
  • I agree. The updates have been too slow. I know it's probably unfair to the staff at Microsoft with the new WP8 kernel and all, but from at consumer viewpoint it's been too little, too late. Besides Msoft has not been able to leverage the ecoSYSTEM. Let's see what the Nokia acquisition brings.
     
  • Android updates are fast on certain hardware platforms. After the updating fiasco that was the Droid Bionic, I will never look back. Android was a great idea on paper but in actuality has become a perverted form of what it claims its not. The OS is flawed and rather than fix the problems they put it on the manufacturers to solve their issues by throwing hardware and GUI overlays at the issues
  • That is not true. When I had an Android it took well over 6 months to receive an update.
  • That will be great as MS is looking at the enterprise customers for mobile phones and integrating BBM and other blackberry services to WP will be great.
  • Nokia is such a great acquisition for Microsoft ( strategically speaking ).  Blackberry though is a money pit.
    Eventhough microsoft's acquisition by Microsoft is a coup for Windows phone.  I still can't help but cry.  I'll go bury my beloved Nokia 3310 in the backyard to remember this day.  It's still alive by the way.
  • You're gonna bury him alive?! Can't you wait until he died? :P
  • Nokia doesn't die
  • They would buy BB for their network infrastructure which is probably as of now the most secure.
  • Gonna be honest, a little worried. I hope ms mostly leaves nokia d/s alone to do their thing, cause nokia's been way more active with updates and products than the big kahuna has
  • Why are you worried? Microsoft and Nokia have been working together on Windows Phone for a long time. If anything this will bring the two even closer together. 
  • As long as my Lumia still say's Nokia at the top,, I'm gooood❕
  • That's the same question asked in a previous post! I'm just hoping Nokia will still have the momentum of updates and getting apps for us Lumia users.
  • the have a deal for 10 years to use Nokia brand on feature phones as for smartphones im guessing they will keep Lumia brand for the next wave of phones
  • Rodneyej and NIST, are you two never not on WPCentral? Btw, I enjoy your bickering.. You two seems to be making the most comments lately. (with each other).
  • Well, ever since NIST came out the closet I decided I would be his friend when nobody else would... Now he thinks I like him sexually, and he won't leave me alone...
  • Lol
  • :D
  • +1
  • That's what she said etc. etc...
  • I would prefer my phone to have Microsoft windows phone branding on it.
  • The problem is that the rest of the world would have a hard time buying a MS branded phone compared to a Nokia branded one. Nokia has way better reputation.
  • I think they should remain Nokia Lumia devices, but have Microsoft's name small on the back... Just like WP commercial's do it..
  • Yeah I'm one of those who never owned a Nokia device until the L920. But I've been so impressed with them as a company that I've become a loyal Nokia supporter in this short time.
     
    My hope is MS just ups the allotment of money and resources to Nokia, while allowing them the independence to keep doing their thing.
  • I also have a Lumia 920 and am a fan of Nokia. However I am a bigger fan of Microsoft. I have Xbox, windows 8, windows phone, use bing, outlook, office, skype etc. I like the fact that its all one big ecosystem. If Nokia stopped making windows phones I'd be a little disappointed but just move to a different manufacturer like htc. I'd never have loyalty with a manufacturer. In fact if I had it my way I'd have a surface phone.
  • Could not have put it better myself.
    I want my smart phone to say Nokia and be a Nokia.
  • As long as my phone works as smoothly as WP does, I could care less, but I do believe less branding is better, the Win 8 logo works fine for me. I love Nokia, but they made the right choice at the end of the day, letting their stock holder make a little money.
  •  Finally, Microsoft is obtaining a limited license to the Nokia's brand names. The Lumia (smartphone) and Asha (featurephone) brands move to Microsoft. Redmond can continue to use the Nokia brand on all current products, and can also use it for ten years on any products based on Nokia's Series 30 and Series 40 featurephone platforms. However, it appears that future smartphones will not be permitted to carry the Nokia brand.
  • That seriously sucks, but oh well.. Moving forward well get used to,,, whatever..
  • I know it will, that's why im kinda worried. I love both companies but I hope Microsoft's habits of relatively infrequent updates and news dont leak into Nokia, cause nokias perfect to its customers and it should change nothing. Chances are it'll be an entirely good move; its just the first thing that came into my mind.
  • I have two passing-thought concerns:
     
    1. Nokia is the one who has put the biggest effort into bringing apps to the Windows Phone platform, likely to the point that they threw money at companies like EA to get it done. Given that Microsoft owns LOADS of potential mobile gaming IPs (plus the fact that they have a LOT more money to throw at devs than Nokia), you woudl think that Microsoft would be leading the charge in getting games and apps on the platform, but Nokia really was the one doing that. Now, I have the slightest bits of concern that the half-hearted efforts of Microsoft, in the gaming sector, will bleed throguh into what Nokia was doing, leading to less prodding of developers.
     
    2. What's Microsoft planning for the mapping tech? I don't imagine anything will change, but Windows Phone started with Bing Maps. Microsoft now owns the hardware side of the company that was providing HERE Maps. Is it possible that we see Microsoft pull an Apple Maps, and that it coudl be a fiasco of similar proportions? If they AREN'T plannign to make Bing Maps the center of the location services again, why is it still around, embedded within the OS and sitting there on Windows 8/RT?
  • Given that Nokia was about to put here maps in some cars and given Microsoft's sync tech.  I would imagine a better sync type car system in the future.  How Bing will come into this I have no idea.
  • Bing will be used by "connected cars" for on the go searches.
  • Except there wasn't manufacturer overlap between HERE (which I believed was limited to European makers) and Sync (which was Ford-only, no?), at least, not that I know of. I'm not sure what you're getting at.
  • Microsoft didn't buy here.. They cannot change the brand.
  • They allude to it in the PDF document above. What I think they're trying to do is combine supplement HERE with data from other sources (Bing) and offer that as a package on their devices. Essentially, they'll combine data from HERE & Bing and call it "HERE Maps" on their devices. So Bing goes away as a standalone map service but the data obtaining infrastructure behind it remains intact and supplements HERE.
    One more thing. If I read correctly (skimmed over it)...Microsoft has detailed possible "future plans" in there that involves taking over the HERE mapping division from Nokia as well (or having ownership rights to them). So, in a way, they'd be allowing Nokia to grow the thing until they can buy it one day. That's a possibility. This means that Nokia will be left mainly as a company that provides mobile/wireless infrastructure and offers some services to mainly IT clients. Sort of like IBM in a mobile world. Considering how profitable NSN has been for them, I'd be happy as Nokia investor as the biggest drag on stock (devices and HERE) have been or will be eliminated.
    Still frightnening for me as I see Nokia being the main unit pushing forward the development of WP. Microsoft, as an entity, still hasn't gotten around to focusing properly on mobile. They put the money in and back a half-baked effort and that's costing them dear. I just hope the presence of Nokia's division furthers the development of WP instead of it going the other way. Good thing is they plan to keep Nokia's device division completely intact and I think they should now handover official development of the OS to Nokia as well. Let Bellfiore and his aides take a supporting role. The pace at which they've been getting stuff done is sluggish at best.
  • That's why they are purchasing Nokia, to get their focus. Did this not take some thought & focus??
  • .
  • ..
  • Also, look at Skype, microsoft has given them space
  • All we keep hearing is about Nokia pumping out devices and Microsoft's inability to update software. Why would we assume Microsoft will take on Nokia's work ethic and not the other way around, especially when Nokia D&S is staying in Finland. Just another divison to get lost in the corporate mess of Microsoft.
  • There is a good chance that the wp development team will get merged in with Nokia. I bet the programers will get a lot more responsive to the needs of Nokia once Elop is charge of the development team. Nokia has some good programmers as well and that should help the team as well.
  • I'm hoping the same, and that in essence the Nokia team takes the reins on WP development and support, since they're the best at it, and we see WP outstrip its two main rivals.
    I read the Powerpoint, and while Microsoft is acquiring the Lumia and Asha brands in the deal, I reeeeeeally hope that they are able to keep the Nokia branding across the range, not just the feature phones (page 23 of the Powerpoint). It's so much easier telling folks about a Nokia than a Microsoft phone, because they don't know that Microsoft makes phones, or that it's different necessarily than the Windows Mobile phones of yesteryear. You tell someone it's a Nokia, and they know right away it's a legendarily-durable, reliable, and well-made quality piece of equipment that lasts longer than you want it to.
  • Rodneyej will hold your hand and help you get through this dude. It's gonna be ok.
  • LOL❕❕
  • Lol
  • I just hope that this means that lumias will get cheaper(no licensing cost) or rather better at same price. Also as Microsoft now owns the nokia team it can kinda merge nokia and windows phone software people together... Increasing man power and innovation..
  • Microsoft is letting everyone know that they are very serious. Very exciting times!
  • Agree, and I think perception of the force behind WP is changing literally tonight.. I wonder what this is doing to developers perception right now...
  • As long as low sales continue, developers views will not change. What it does tell them is that Microsoft will not pull the plug on WP anytime soon. It shows that Microsoft will spend billions to make their product important. Microsoft needs to pay off developers and bring all the niche apps to the platform and close the app gap.
  • Yeah..
  • Registering to develop an app is only $19. Why wouldn't you want to port one of your already developed games over? I think its a dumb move not to tap into the evolving WP market place at such a great advantage. You're more likely to be seen. Instead of drowning in a sea of bad apps.
  • Yep.
  • It was about time! Now its time to bring more innovation to the WP ecosystem. 1. Bring Top Apps as soon as possible (Instagram, Pinterest)
    2. Buy Vimeo as soon as possible.
    3. Iron out all the wrinkles that WP8 has at the moment (screen rotation lock, true multitasking, VPN and RDC for us IT people).
    4. Buy Twitter.
  • They want to sort out their own products before buying twitter etc.. Maybe spend money on fixing skype.
  • +1...I want reliable video chat!
  • +9001, and not just video chat, Skype should be what whatsapp/kik etc are trying to be.
  • I'm still confused at the concept of making the Skype CEO the new Microsoft CEO when he won't get his dumb team going on Windows Phone integration.
  • RDP?? I have two apps for that that I use to control my home server and computers as well. Topperware PC remote is 1.99 no software needed on the remote computer/server. And ConnectME by CRTVApps is amazing for 9.99. One for each budget. I think crtv's is totally worth the 9.99. Check it out!
  • I guess that's cool, but my Tilt II from 2009 came with an RDP client preloaded at no extra charge. I don't like paying for something that used to be free and is currently free for all PCs and Macs as well.
  • As it happens, I think MS should exclusively tie up Vimeo with the Xbox one uploads feature. Get Xbox users to upload there rather than Youtube. It would help drive a ton of content away from Youtube, which they damn well deserve.
  • Cheap for all the patent usage :)
  • And a lot cheaper than shelling out $1 billion per year to keep Nokia exclusive to WP (and the other parts of the agreement)
  • Keep the Lumia brand and improve on it like you did with Skype.... And about Skype.... Hopefully Skype for WP will be better than Android and ios version in the future
  • When those 50 million Asha phones are running Win 8 lite then the strategy becomes more apparent. Anyone who noticed Samsungs predatory attempts to tank Win 8 on all computers and devices knows the rest. Win 8 doesn't fit into their TVs strategy etc. They are afraid of cannibalizing their PC line with decent Win 8 devices at competitive prices. Dell is a mess. HP is confused. Both tried selling their hardware divisions.
  • From the Business point of view it may be good. But as a long time fan of Nokia phones, I feel sad. Nokia always made phones with a lot of passion and commiittment to the customers. RIP Nokia. I guess now MS will eventually kill off the feature phone division of Nokia.
  • Feature phones is the main reason why MS is doing it. They want to take a share of international sales. And Nokia will be left to do their thing because all device development stays in Finland.
  • Those feature phones will be Windows phones in 2 years. The 520 series (or a replacement) will be under $50 in 2 years. So yes feature phones will evolve.
  • I like Nokia 's passion as well! However, this  is what MS needs to stay in business.  They are trying to keep up with the changing  market. They have more competition on every front then they ever had

    This aquasiition is very important for MS, they have a chance to get in to the Blackberry market and compete in every other Mobil market. They did not have the ability to do that until they made a deal like this. 
    PICK think it was a great move on their part and they can not afford to mess it up!
     
  • To summarize what just happened: INDESTRUCTIBLE WINDOWS.
  •   LOL!   So, what happens when someone who lives in a (Gorilla) glass house throws a 3310??? XP
  • I'm happy that Microsoft bought Nokia because it shows they are much serious about the platform and is taking things to the whole new level. I'm hoping that Microsoft that innovate the OS more with features and have some bug fixes (especially in the built in facebook chat). Thats all I want to improve in the OS. Anything else is a plus for me.
  • The only thing I'm worried about is the support for the rest of the world, MS is stubbornly US Centric, hope this doesn't change anything.
  • Thats exactly what I'm afraid of. If they launch their smartphones like they did with the Surface then I'm afraid that Wp market share is going to go down hill here in europe where is has 8%+ market share. I don't get it, how come a large company like MS is incompetent to do a large release like Apple does? Does Apple have two heads?
  • Apple doesn't need two heads. They just use the ones they have. Microsoft doesn't. And if Microsoft buys Nokia, I bet they'll keep it US centered. And Apple will thank them because they'll sell easier the iPhone 5C if all of a sudden they're not competing with a loved brand like Nokia but with a loathed by many brand like Microsoft.
  • Instagram announcement tomorrow?
  • No.. But, maybe GDR2 for att/920 will come tomorrow....
  • No
  • Yes
  • I like this move. About time IMHO. but I also see the skeptics thinking MS will allienate OEMs... Well my answer to that is, "THEN GET OFF YOUR ASSES AND MAKE SOMETHING MATTER FOR WP LIKE NOKIA HAS!" ahem.... But this is going to make WP better using Nokia SW and and hardware combines into WP. Microsoft can make a surface phone and Nokia can keep pushing the envelop for really really amazing new innovations. I want a Morph WP10 device please!!! http://research.nokia.com/morph
  • I'm worried about the future of $15 phones on emerging markets.
  • Some people here really are blind fanboys. Yes, there certainly is a small chance that very good things come out if this, but on the other hand the risk that everything goes to shit is very very high. An awesome company like Nokia losing its independence just can't be a good thing and MS likes to mess things up; like we all know very well.
  • Actually, Microsoft has a strong history of purchasing companies and vastly improving their products: SQL Server
    DOS
    Security Essentials
    Almost the entire System Center suite
    Their TCP/IP stack
    Winternals
    Etc
  • Careful. You're exposing yourself to the wrath of blind fanboys who make iSheeps look normal fans. You can't criticize what's more than criticize-able around these parts ;)
  • Don't worry, you'll love your iPhone.
  • But not as much as you love me, I bet.
  • On the other hand the risk of everything going great is very very high.
  • MS, you still need EU approval before you buy anything. I would never approve such a deal. Elop has at best mismanaged Nokia to make it a takeover candidate by refusing to use Android...
  • Except Nokia has been doing much better with Elop, than the 5+ years before him. You have to understand, without Windows Phone they would be dead. And if they went Android, would be faded into obscurity and sued to death. Lose-lose without Elop.
  • EU approval, Finish government approval and shareholders approval (and the shareholders have been asking for Elops head in a tray for sometime...).
  • It will get approved.
  • Of that there is little doubt.
  • Now the Nokia RT tablet makes sense.
  • No it doesn't. RT still needs a lot of optimizations to be worth it.
  • RT tablets have never really made sense
  • Microsoft Lumia
  • That sadly doesn't sound right. What if they name the OS Lumia???? I actually like that. "Microsoft phone running the Lumia OS"
  • nah Surface Lumia sounds better
  • I read a comment on GSM arena and that person called it Microhard. That made me almost fall of my couch.
  • Pow!!!!! MS is in charge of the girls!!!!!!
  • I hope this move works out great for Microsoft. With Blackberry on the decline, we need a third operating system in the mix. Competition is good, and I don't want the mobile space to be a two-horse race.
     
    (Yes, this comment is similar to the one I posted on Android Central).
  • The PDF doesn't open.
  • Wow I feel like a huge nerd right now for being excited with all these news. This is big but try explaining that to my wife lol
    -920 owner
  • Nokias has been in financial straits for a while now. It's eased up, but they're still not doing great and their stock has been stagnant for well over a year now. Their inability to grow has led to their inability to take risks on the hardware side. Microsoft knew this, and Nokia knew this. Specs aren't everything, we all know this. My 920 is still a rocketship compared to all buy the highest-end Android devices. But specs are something that speak to the consumer. Someone can't honestly push a device that may be the best performing, doesn't have anywhere the higher numbers. How do you counter "This one says it has four cores, while yours only has two," without going into a lot of jargon that will go over the consumer's head, or without sounding like you're making a cop-out? Well, you can't. That's something Windows Phone has always had working against them on the sales floor, and something that Nokia may have been able to help, but could not justify the risk.
    Meanwhile their inability to take risks and throw out a serious cutting-edge phone has likewise hurt their ability to grow. The closest we've seen to cutting edge in a Nokia Windows Phone has been the 1020, and admittedly niche, expensive device. I doubt Nokia could come close to handling the amount of orders they would have received had they marketted it differently and it caught on. Hell, they were backordered on the 900 and 920 on their launches. They couldn't deal with the risk of having a million Nokia phones sitting in a warehouse somewhere, so production was short of demand. While the partnership with Nokia has been very beneficial to Microsoft, it wasn't anywhere near what it could have been, even with the $1 billion dollars of investment helping Nokia out. So Microsoft found themselves in a position where no one is making truly cutting edge Windows Phones, and Nokia found themselves in a position where their business couldn't grow enough to justify a risk. Nokia wanted to concentrate on their admittedly great software side, and Microsoft needed some way to put a very high end device in the hands of consumers. They both found it in this deal.
    I very much look forward to a Nokia software division with tons of upside and a huge cash backing for the first time in a long, long time, and I very much look forward to holding my Microsoft Surface Windows Phone 8.5/9 whatever they'll call it with it's quadcore processor, retina-quality display, and 41mp camera.
  • I wanted to read what you wrote... I really did. But man, this is a "comments" section and you wrote a book.
  • lol sorry. Tl;dr version Nokia was great, but couldn't take risks. Microsoft will take risks and Nokia can concentrate on their awesome software and infrastructure.
  • Couldn't have said it better myself. I am just waiting for the Vimeo acquisition next. That is the one deal they really need to rid themselves of the dependency on Youtube.
  • I am surprised you would rather have your phone called Microsoft something something but not Nokia. Weird.
  • Actually, I prefer Nokia, and am proud to own a Nokia, but I don't think Microsoft can/will necessarily stick with the name for any of the phones, let alone their flagship.
  • Notice the PDF says One Brand, One Voice, Windows Phone. Not Lumia. I fear Microsoft may undo much of the work Nokia has done successfully building a brand. Sadly Microsoft's name and Windows phone name don't appeal to the masses. Lumia however is making inroads.
  • they stated that they're keeping the Lumia brand name
  • Instagram?
  • Twisted it may seem, Microsoft's acquisition of Nokia is THE best EVER advertisement for its Windows Phone OS. Everyone is talking about it! Genius!!!
  • Rip nokia no more amber updates I guess, loved Nokia and still will after 10 year's from now Nokia will vanish under the huge name of MS
  • Nah. I don't think the amber updates will stop. Nokia will continue to be as independent as it is now. Why would Microsoft turn off the swich on Nokia's developers, when Nokia's doing a great job more than MS'es :)
     
    Generally, this acquisition is good for Nokia. And obviously, better for Microsoft.
  • Hope you are right :)
  • I think Microsoft had to do this, or face the risk that someone else did and forced Nokia to make Android phones. That would have been disastrous for Windows phone at this point. Now it will get very interesting. I think the next big thing will be HERE Drive in cars, running on the cheap Windows Embedded OS. That's another multi-multibillion business for Microsoft, easy.
  • No MS bought nokia for one simple reason they study it carefully and proven that it is profitable for them to have nokia.
  • Makes sense! Guess there will be no more HTC windows phones....
  • I wonder what HTC thinks about all this? They 'used' to be a premium WP maker but have since chummed with Android :(
  • The r and d for camera should continue
  • What's going to happen to Nokia's excellent software/app development? I do hope that to be kept up as this was always one of the key assets putting Lumias in the lead of the WP handset world...
  • I just wanted nokia does not use android, and it happens, is now NOKIA ANTI ANDROID
  • i hope they won't change the name and it will still be called nokia
  • I don't have any concerns about the frequency of updates. At the end of the day elop will still be in charge of the mobile hardware division. The msft division head for devices and services will answer to elop even if he doesn't get CEO.
  • so the progress of dvlpt will be marching in the slow MSFT process instead of the Ambitious Nokia. Nokia should have bought Microsoft ... LOL
     
  • Is this a joke or is it real?
  • So, new Lumia phones will be branded with NOKIA or Microsoft?
  • Finally, Microsoft is obtaining a limited license to the Nokia's brand names. The Lumia (smartphone) and Asha (featurephone) brands move to Microsoft. Redmond can continue to use the Nokia brand on all current products, and can also use it for ten years on any products based on Nokia's Series 30 and Series 40 featurephone platforms. However, it appears that future smartphones will not be permitted to carry the Nokia brand.
  • What worries me is the bullet point on Slide no. 23. 'Microsoft is acquiring ownership of the Lumia and Asha lines, and a 10 year license for using the Nokia brand on feature phones.' Now, there is no mention of 'smartphone' anywhere! I take this as the biggest indication that Lumias will not be prefixed with Nokia. I am bummed. :( What do you guys say?
  • Doesn't bother me in the slightest if any future Lumia phones I end up getting doesn't have the Nokia branding. Hopefully, with all of those Nokia employees transferring to Microsoft the design and innovation behind the Lumia range will continue without too much interference from Microsoft
  • FYI, it's rationale not rational.
  • So will the other OEMs get all the updates that lumia users have been getting for a while now?
  • I'll be good as long as ms doesn't pull an hp with webos and palm
  • how does this affect carrier exclusive deals? Also, does this mean that the Nokia/Sprint beef will finally be over?
  • I wonder who actually uses Windows Phone because of there love for Nokia or actually uses it because they really like Windows Phone or maybe both??
  • I just hope MS is not trying to copy the Apple model. I also hope that who ever takes over leadership of MS is not only a realist but also a visionary and I don't see Elop as being visionary.