The Blind Leading the Blind: Microsoft Officially Acquires Nokia’s Mobile Division

by Matt Klassen on April 22, 2014

Fraught with regulatory delays overseas Microsoft’s long awaited purchase of Nokia’s mobile division is now officially slated to close by the end of the week, Nokia confirmed on Monday, noting that all that remains are the customary closing conditions, dotting the ‘i’s and crossing the ‘t’s

The closing date for this sale was originally scheduled for late March, but Microsoft reported last month that the deadline would be delayed due to continued review by certain antitrust regulators in Asia. But now with all such bureaucratic processes complete, the move I questioned would ever come to pass the day that Microsoft and Nokia first signed their initial OS partnership all those years ago can now finally come to fruition.

The new mobile division, renamed from Nokia Oyj to Microsoft Mobile Oy, will serve as Microsoft’s mobile arm, meaning it will subsume Microsoft’s current mobile operations under the watch of former Nokia CEO Stephen Elop, who is returning to Microsoft as part of the deal. While this purchase certainly gives Microsoft a mobile product with a global reach, are we to believe that the merger of two struggling mobile brands is enough to produce one competitive entity? I, for one, highly doubt it, as it seems more like a case of the blind leading the blind.

There’s no question that by purchasing Nokia’s mobile division Microsoft is able to consolidate its operations, for as I’ve said time and again, the real money in the mobile market is controlling as much of the operation as possible: devices, distribution, and, most importantly, operating system. As Apple has demonstrated (at least once upon a time), with such control companies can consistently offer a better product and reap more financial rewards from the market.

Such a strategy, however, hinges on one key point: that people actually want to use said mobile product, and given that Nokia doesn’t really have any desirable high-end smartphones and that Microsoft currently offers an operating system no one wants to use, it seems this marriage of mobile losers has little chance of spawning a winner.

”Since when does a combination of a struggling consumer software and hardware company make sense?” Patrick Moorhead, a former AMD fellow who chased Intel for his entire career, was quoted as saying. “This acquisition doesn’t address why Windows Phone has been unsuccessful so far in driving big-time market share. It’s not a resource gap at Nokia, Samsung or HTC. It’s not a proximal issue between Nokia and Microsoft. The problem with Windows Phone is that it has been in catch-up mode for years, unable to come up with the killer feature.”

As PC World writer Mark Hachman wrote several months ago, “Microsoft and Nokia may have simply thrown a rope to one another, cried ‘Save me!’ and jumped off a cliff in unison.”

But with all that in mind, finally acquiring Nokia’s mobile division comes as part of a monumental shift at the Redmond company; so perhaps with new leadership, a new vision, and now a new mobile subsidiary the company may finally be able to bring meaning to the fact that it does currently sit in third place (3.3 percent of the market share, compared with Android’s 79 percent) in the global smartphone market.

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

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