Perhaps it didn’t really come off as such a big surprise when Microsoft announced that it was buying what was essentially the mobile device aspect of phone-maker Nokia. After all, Microsoft’s mobile operating system strategy was heavily reliant upon its partnership with the Finnish brand, and Nokia wasn’t really doing much on other fronts as far as smartphones are concerned.
Microsoft and Nokia – Overwhelming Negativity!
The responses to the deal—worth $7.2 billion and expected to be completed by 2014—were overwhelmingly negative, with most commenting that Nokia as a phone brand was as good as dead. We can’t really blame people for thinking that way, considering how this partnership has been so disappointing since its inception.
Transition into hardware company
The biggest thing to note with this deal is that Microsoft goes from software company to one that also produces hardware. Remember, the company’s main value proposition is centered around software—Windows, in particular—but with mobile eating up more and more of the consumer computing pie, MS saw it fit to make this move.
In this day and age where many consumers put a premium on things like industrial design and build quality, nailing the hardware part of the product is just as important as making sure the software works and looks great.One other concern about this transition is how much focus Microsoft will have on both sides; there’s a great need to grow Windows Phone, and there’s also a lot to be done to bolster Nokia’s product line. Getting hardware to come out right is no walk in the park. If you’re a telecom, for example, you can’t just decide to make your own phone system (get more info about business phones) and expect it to be great just because you have the service to support the hardware.
Curious timing, big opportunity
The deal comes on the heels of Microsoft announcing the eventual departure of CEO Steve Ballmer, and it figures to be the biggest factor when it comes to judging his legacy.However, this is a ballsy move from Ballmer (pun somewhat intended). Of course, ballsy does not in any way mean that the move makes complete sense, but getting full control over a key component of the product line and strategy should allow Microsoft to push its offerings further. While the context and the conditions are different from Google’s acquisition of Motorola Mobility, this move puts Microsoft in a position to be more competitive with the other big players.
Can Nokia survive?
At its peak in 2001, Nokia was valued at hundreds of billions in euros or dollars. When former Microsoft exec Stephen Elop hopped aboard as CEO of Nokia in February 2011, he was the harbinger of the alliance. Since then, he has managed to halve the stock market value of Nokia. To say that the company is struggling would be an understatement.What the company needs now is to make sure that it gets ahead of the curve—or at least not fall behind the rest like it was wont to do in recent years.
Can it survive, or is the brand officially dead as many have commented after hearing news of the acquisition? Only time will tell. In this case, though, that time is sure to come sooner rather than later. There’s a lot at stake here for both brands, but for Microsoft (and Ballmer) especially, which is why we expect the company to pull out all the stops this time around.
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