by a Thinker, Sailor, Blogger, Irreverent Guy from Madras

After Microsoft, will Nokia go back to Boots

It is now official - Microsoft will take over Nokia's mobile phone business for $7.2bn or 5.4bn euros.  As a part of the deal, Nokia will also license its patents and mapping services to Microsoft. It is no wonder that the Nokia shares jumped 45% on the announcement.

Microsoft will pay $5 billion to buy Nokia's Devices & Services unit and an additional $2.2 billion to license Nokia's patents.  Microsoft chief Steve Ballmer in the statement claimed, “It is a bold step into the future - a win-win for employees, shareholders and consumers of both companies."

I have my doubts - mainly three.
  • For one how come a guy who is to be booted out in 12 months is allowed to make such a bold decision - especially when Ballmer’s tenure of Microsoft is full of missed opportunities and wrong business goals?
  • Second point is the fact that Nokia started to lose its position as market leader of mobile phones when the company decided to give up Symbian OS in favour of Windows Phone OS.  Nokia’s smartphone sales which always showed an upward trend, collapsed after the switch to Windows Phone.  Between 2011 and now, Nokia lost its position as world’s largest smartphone maker to end up as 10th largest.  No a mean achievement that!
  • Third, when Google took over Motorola Mobility, its chief Sanjay Jha - the architect of the Motorola turnaround - was booted out and replaced by a longtime Googler Dennis Woodside.  OTOH, Microsoft is welcoming into its fold Stephen Elop, who became the chief of Nokia in 2010 and watched the slide from No. 1 to No. 10.
It requires a lot of squinting to view this deal as a ‘win-win’ one.  At best it looks like a move to avoid ‘loss-loss’.  But yeah! a squint eyed look can make it look win-win.

For, Nokia, before the deal, was looking ripe for a takeover by someone.  If that someone was not Microsoft, it would have added patent headaches to the already beleaguered Microsoft Windows Phone.

Under such a ‘hostile’ takeover, Nokia would have been run down by the troll, to squeeze every cent out of its patents used by Microsoft - in that context, $2.2bn for 10 years sounds cheap and smart.

Then again, even this is not an original idea.  In May 2012, Google announced takeover of Motorola Mobility to prevent similar potential patent problems.

One guy who surely won because of the deal is Stephen Elop, the current chief of Nokia.  Stephen Elop will join Microsoft, and is seen as a potential successor for Steve Ballmer.  Beat that!

A group which definitely hit Jackpot are the Nokia shareholders, who would suddenly find themselves with bullish shares and $5bn in cash - which hopefully they can get their hands on and junk the shares.  For, Nokia will be left with -
  • network infrastructure and services;
  • mapping and location services; and,
  • a technology development and licensing unit.
Basically a brushed up ISP and a municipality planner rolled into one.


My nasty half natters, ‘Or perhaps they can go back to their Boots, sorry roots - and reacquire their original paper making and rubber shoes business.  Or combine both and make paper shoes!’

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