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Anorak | Microsoft buys out Nokia’s handset business: market freezes

Microsoft buys out Nokia’s handset business: market freezes

by | 3rd, September 2013

The Nokia brand name is displayed on the floor of the New York Stock Exchange in New York, Tuesday, Sept. 3, 2013. On Tuesday, Microsoft announced it would pay $7.2 billion to acquire Nokia's line-up of smartphones and a portfolio of patents and services. (AP Photo/Seth Wenig)

SO. Microsoft has taken the plunge and bought out Nokia’s handset business. They didn’t pay that much for it, under £5 billion all in, which is a good insight into what a parlous state the business is in. This leaves Nokia still making all the kit and towers and radio equipment etc that the handsets use to connect to the network, but they’re leaving the handset business altogether.

For Microsoft the deal looks rather different. They’ve been finding it very hard to get handset makers to start using Windows Phone (surprisingly, a rather good little operating system) and their market share is sputtering. Nokia were the only people who had committed to it in a large way. But there were still problems in integrating the software and the hardware. Buying the manufacturing operation now means that Microsoft can design the OS for the hardware and the hardware for the OS: essentially, starting to do what Apple has been doing all along.

But this leaves an entirely different problem. Microsoft wants to licence Windows Phone to as many people as possible. But what is going to be the reaction of those other handset makers to the competition from the newly integrated Nokia/Microsoft behemoth?

They might think that great, Windows Mobile will obviously now be a success therefore we should get into the market ourselves. Or they might think that, well, that’s it, we can’t compete with them so we’re  well out of it.

Going to be interesting to see which happens.

 



Posted: 3rd, September 2013 | In: Money, Technology Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink