There’s no question the mobile sector was a little confused when Nokia and Microsoft struck a landmark partnership deal a little over a year ago–the former agreeing to use the latter’s Windows Phone mobile operating system on all Nokia smartphones–with questions raised about why Microsoft would want to hitch itself to the struggling Finnish mobile company.
But there were some that saw the deal as simply pretence, masking Microsoft’s true intention of gauging the viability of an outright acquisition of Nokia’s mobile assets.
While at the time I certainly scoffed at the notion that Microsoft would want anything to do with Nokia’s struggling mobile division, it looks like I was wrong, with a recent report from The Register stating that last year Nokia gave Microsoft access to its books in order for the Redmond company to determine if Nokia was a worthy investment…ending with Microsoft running screaming into the night
At the time the original partnership been Nokia and Microsoft was announced, confusion reigned as many tried to comprehend what Microsoft, still trying to eek out a competitive space in the mobile market, would get out of the deal, as clearly Nokia’s mobile presence was falling faster than Facebook’s stock.
Shortly after the agreement was struck rumours started to swirl that Microsoft had entered into the deal with Nokia as pretence for an outright acquisition of the Finnish company’s entire mobile division, a move that might have helped launch the former’s Windows Phone OS into contention with Android and Apple’s iOS.
Of course I struggled to comprehend why Microsoft would ever be interested in such a deal, questioning the timing of the rumours (why would Microsoft invest millions in the partnership only to acquire the company after?) and questioning the viability of Nokia as an investment.
Now, a year later, rumours have come to light that a deal was much closer than any of us really imagined, as “well-placed sources” told UK media outlet The Register that Nokia had given Microsoft access to its financial books late last year to allow the PC giant to determine whether any part of Nokia was worth purchasing, with Microsoft abandoning the prospect shortly thereafter.
In retrospect perhaps it’s not as crazy to think that Microsoft seriously mulled over an acquisition of all or part of Nokia, given the fact that Nokia has already established a significant global market base and, due to the Finnish company’s ongoing struggles, would be incredibly cheap. In fact, given that Nokia’s stock has plummeted some 90 percent in the last five years, sitting now at $2.91 per share, Microsoft could purchase Nokia with its quarterly pocket change. So why didn’t it?
The truth of the matter is that even though Microsoft has the resources to acquire Nokia, the latter is simply a poor bet, particularly given its persistent inability to compete in the smartphone market. With such a damaged brand, Microsoft would have to work overtime just to regain the interest and trust of the general public, a headache for a company looking to eek out its own share of the mobile pie.
In the end, while I have to admit that I’m surprised Microsoft went as far as it did in kicking Nokia’s tires to see if a deal was worth it, I’m certainly not surprised by Microsoft’s final conclusions. Nokia is a bad deal anyway you look at it, a mismanaged former mobile giant who is getting used to life at the bottom of the barrel; not a place to start for anyone looking to make inroads in the mobile market.