Is Microsoft Looking to Acquire Nokia’s Mobile Handset Division?

by Matt Klassen on May 17, 2011

When trying to rediscover or recreate one’s identity there has always been a helpful adage, “out with the old, in with the new,” and it’s a saying that could very well be Nokia’s new corporate mission statement.

On the heels of signing a blockbuster agreement with Microsoft to feature the WP7 operating system on all top end Nokia device, which was followed by the company giving up on Symbian, Nokia is taking its house cleaning one step further, its abandoning its Ovi brand.

But while Nokia has promised not to close down its Ovi mobile services—which includes its Ovi App Store—amidst this rebranding process a new rumour has developed, one that could see Nokia giving up more than a strange sounding Finnish name for a moderately successful mobile services brand.

In fact, if the latest rumours are to be believed, Nokia may be looking to deepen its relationship with Microsoft by selling the Windows giant its entire mobile division; a move that would instantly make Microsoft a force to be reckoned with in the global mobile market.

The agreement that Nokia struck with Microsoft several months ago seemed fairly straightforward: the Finnish company would retain control of its handsets, it would use Microsoft’s WP7 OS on all its top end smartphones, and it would use Microsoft’s Bing as its default search engine. In return, Microsoft agreed to pre-install Nokia Maps on all its devices. Beyond that, Nokia promised that it would be revamping its app store to incorporate WP7 apps, and it looks like this rebranding of the Ovi Store is the first step in that process.

If this is where things ended, it certainly would look like not much would change for the average Nokia customer. They would have a new OS, for certain, but their phones, their services, and many of their apps would still be created and managed by Nokia, but of course this isn’t where things have ended.

The latest rumour leaked from Tech industry insider and Mobile Review Editor Eldar Murtazin is that Microsoft is looking to further its partnership with Nokia, moving to actually acquire a significant share in Nokia’s handset division. While this rumour certainly needs to be taken with a grain of salt, if it turns out to be true, it would certainly make Microsoft a serious contender in the global mobile market.

That being said, the deal would certainly be a strange on if it did indeed go through. Microsoft has spent millions of dollars to get its WP7 OS onto Nokia phones, and while the whole thing may have been orchestrated to get its WP7 some global exposure before it attempted to insert its own Microsoft handsets into those markets, if Microsoft is planning an acquisition of Nokia’s handset division anytime soon, it will certainly be far too early to reap the benefits of Nokia’s global market saturation.

In the end, I for one remain sceptical regarding this latest speculation, as I simply cannot see why Microsoft would have invested millions in getting its OS onto Nokia phones if its intention was to purchase, either entirely or in part, Nokia’s handset division. But knowing Nokia and its history of head-scratching business decisions, we certainly can’t right it off.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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