Microsoft Enters The Mobile Market After Buying Nokia’s Phone Business Worth $7.2 Billion

What if? Was a most enticing topic in recent years in which websites, blogs claimed all possible equations in the technological market. This one has actually turned out to be a realistic issue as Microsoft has purchased the device and service unit of Nokia that has brought up the Lumia line under the Redmond roof.

This step has resulted into a tie up between Windows Phone 8 and its biggest hardware supporter, that will give the company an integrated mobile offering alongside its surface tablets and other devices. The deal will be seen closing in the first quarter of 2014, after which Microsoft will be paying 3.79 billion Euros to buy the Nokia business, in addition to 1.65 billion Euros for getting complete rights of its patents.

Although these numbers seem to be a huge amount it is considerably less than what Microsoft paid for Skype in 2011 which was 5.44 billion. Around 32,000 people will be getting transferred from Nokia to Microsoft, of which 18,300 will be directly moving into manufacturing. Microsoft CEO Steve Ballmer called it a bold step into the future as the two will come together from an outgoing track. Through an email, Ballmer mentioned the Lumia 1020 as an illustration of what the companies could do together. Although in contrast to this he also said that the phone hadn’t caused the marketshare bump that it merited. He claimed with confidence that now is the time to build on this momentum and accelerate their share and profits in phones.

The company claimed that Asha will also be seen on-ramp to windows phone. Asha brand proved to be a driving force behind the sales of Nokia’s low-end phones. Asha will be giving Microsoft a far well-built path for Windows Phone, and admittance to millions of customers in developing countries which will play the role of on-ramp phones to Windows Phone. This also proves some credibility to the belief that Nokia’s high-end scheme isn’t working and analysts forecasted a horrendous Q3 for the company as its struggles to find a grip are well documented. The truth is that Microsoft’s licensing deal for the Nokia brand never included future Lumias as Nokia as a smartphone brand is effectively dead and eventually Microsoft has bagged the line-up in-house.

EVP of Operating Systems Terry Myerson claims that, although Nokia was till date Microsoft’s best hardware partner for Windows Phone 8 and was cautious to note that Microsoft’s purchase wont come with preferential treatment. Similar to this, Google has a relation with Motorola as a result of which he promised every partner would be treated the same.
Although the device business has now gone, Nokia is planning to focus on three core technologies the NSN (its network infrastructure); HERE (its maps and location-based services); and finally Advanced Technologies (which is a licensing and development arm). For a four-year license of the HERE services, Microsoft will be paying Nokia to bring the new company more profits and firmness than it previously had. But this is going to make Nokia a much less significant company.

According to the agreement, Nokia’s current CEO and President Stephen Elop is stepping aside as to interim CEO Risto Siilasmaa who was the ex-chairman of Nokia’s Board of Directors. Stephen Elop will go back to Microsoft and lead an expanded Devices team and report directly to Steve Ballmer, once after the acquisition is approved. Julie Larson-Green will be seen reporting to Elop and eventually continue to command the Devices and Studios team.This giant step has given Microsoft the type of end-to-end control in mobile that companies like Apple and BlackBerry have previously enjoyed and also a critical measure of quality control.

Although questions are raised – if Microsoft will succeed even after Nokia has failed? Was Windows Phone the problem or was Nokia holding Windows Phone back? Anlayst claim that answers will soon unfold.

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