Tuesday, 3 September 2013

Microsoft buys Nokia's phone and services division


In case you haven't heard, Microsoft surprised very few people tonight when it announced that it would purchase all relevant mobile-related parts of and license patents from Nokia for about $7.17 billion (€5.44 billion). Much has already been said (and will continue to be said) about the specifics of the deal, but it's interesting to think about how this purchase will effect Google and the numerous manufacturers of Android handsets.

It’s not that Windows Phone is suffering terribly or anything, but there’s no doubt that the ecosystem is quite slow in terms of third-party OEM launches and application development compared to the likes of Android. With Nokia, Microsoft can ensure that at least one of those areas is secured in the long term.

The deal  is set to close in the fourth quarter of 2014 following a series of regulatory approvals and shareholder voting, though there’s no reason to believe it will be any harder for Microsoft to acquire Nokia than it was for Google to acquire Motorola. Terms of the deal were not disclosed, though those details might not be far off.

From Google's point of view, the fight for the mobile marketplace is likely unchanged as well. Android activation numbers are steadily increasing, and in terms of worldwide market share consumers still heavily favor Google's mobile OS. Google and Microsoft are clearly not the best of friends when it comes to making deals around mobile, and we can expect to see more of the same with Microsoft at the helm of Nokia.

Going forward, every player in the Android space will keep close eye on Microsoft as it begins to integrate Nokia's handset business into its mobile strategy. It may not mean much now due to the plain fact of Windows Phone's weak market share, but Microsoft controlling the entire hardware and software development for all Windows Phone devices going forward could be a strategy that keeps other companies on their toes.

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