It was announced today that Microsoft has acquired Nokia’s Device Division for $7.71 billion, this will mean half of Nokia will split into Microsoft, with the other half sticking and reforming the company.
The deal will include all of Nokia’s hardware line, including manufacturing factories. 32,000 Nokia employees are expected to move to Microsoft and Redmond will grab 10 years of non-exclusive patent use and a huge license deal for Nokia HERE.
This move comes as a surprise, with Steve Ballmer, CEO of Microsoft, just recently announcing his retirement from the company, scheduled to happen sometime within the next twelve months. Microsoft has also just had massive change in the divisions, changing big executive titles around to make the “all in one” package, similar to Apple’s approach.
Microsoft’s Windows Phone platform holds about 5% of the OS market, give or take one or two percent. Nokia holds 80% of the Windows Phone platform and it seems Microsoft is not comfortable with having a third party have that much dominance, similar to Samsung on Android.
What this crucially means is Nokia is no longer free to make moves in other operating systems, something that has been leaked, rumoured and pressed for the past three years. Microsoft will make Nokia no more than a Windows device brand and may even get rid of the “Nokia” label, settling with Lumia.
Nokia did have a strong connection with Windows Phone, with Stephen Elop, the CEO of Nokia, saying they would not make an Android device multiple times. Now, with this move by Microsoft, devices may not come from Nokia on Android, but software and services will start seeping in.
Stephen Elop will be replaced by Chairman Risto Siilasmaa, once the CEO departs to Microsoft. Once the move is complete, Nokia will have only services, telecommunications and software to work on, with the Asha line getting sold off as well. We believe Nokia may look at skinning, services and launches for new revenue streams.
We doubt this will effect Android in any major way in terms of market share, with a collaborative effort Windows Phone may become a big name in some countries, but Microsoft first needs to sort out its internal structure and finish the deal.