Microsoft has bought Nokia's phone business all for a cool $7.2 billion bucks. But why did they do it? Aside from the obvious "let's try to win over Apple and Android fans" strategy. Here's what Microsoft is getting in return:
- Nokia's smartphone and mobile phone business, including the manufacturing and assembly bits.
- Nokia personnel, including the design team, the sales/operations team, and the Stephen Elop team.
- A bunch of patents, but not all the patents.
- The ability to license Nokia HERE map technology
A Marriage of Convenience
Nokia wasn't just Microsoft's best partner. Nokia didn't make phones for competing platforms, and in its presentation on the strategic rationale
(PDF) behind the deal, Microsoft says that bringing Nokia phones in-house "protects Windows Phone future;".
Nokia's smartphone sales last quarter were down
24 percent (PDF) year over year. Its feature phone sales declined 39 percent. Microsoft coming to save the day may just have helped Nokia.
Moreover, Microsoft is also losing out, making less than $10 off of every Windows Phone unit sold; that number goes way up when it's all in-house.
As the NYT points out
today, there's a world of hundreds of millions of dumbphone buyers out there who will, someday, make the switch to smartphones. And since most of them own Nokia handsets, it's likely they'll opt for Windows Phone when the time comes. Out of familiarity that is.
- Nokia's Design Team: Say what you will about Lumia smartphones, they were beautiful. They'll guarantee that Microsoft's first push into smartphones isn't an embarrassment.
- For years, Stephen Elop was one of the top executives at Microsoft. Then he went to Nokia. Now he's back. He could also be in the running for Microsoft's CEO spot.