Microsoft acquired Nokia – worlds’ second largest mobile phone manufacturer – after experimenting, observing acceptability of Windows 8 on Nokia Lumia devices. This is one chance for the combined entity to stay in the game where they seem to be losing ground. Nokia has in the past struggled with their product strategy, with more misses than hits. Microsoft, for most part struggled to create a compelling offering, in order to fight growing dominance of Android and loyalty of Apple. The deal does provide a base but the task is uphill, as uncertainties remain, especially competition from Apple and Android.
Nokia seems to be on track with low cost devices (e.g. Asha Series) as well as smart phones across Lumia series…but not as much as they would have wanted. Microsoft on the other hand had to do something fast to ensure they move away from their traditional stronghold like PCs/ Laptops to smaller scree environment
There are some clear gains for Microsoft:
• Strong patent portfolio and product development capabilities: The acquisition would
help Microsoft make its Product portfolio stronger and bring in house the product
development capabilities for what Nokia has been known for so long.
• Enterprise Mobility: Four key aspect of EM are
o Mobile application platforms
o Application and device management
o Security, and
o Big Data / Analytics
This acquisition will help Microsoft address EM opportunity better. Microsoft may look at expanding its enterprise suite and compliment it with a mobility solution from Nokia as most of the enterprises operate on a Windows platform and the device integration becomes much easier
• Comparative Lower Acquisition Cost: Compared to Motorola’s acquisition by Google (USD 12.4 Bn) and Skype’s acquisition by Microsoft (USD 8Bn), the cost of acquisition seems very attractive. Thereby strengthening the business case for the acquisition.
Before Microsoft begins to generate more business value out of the acquisitions there are many challenges that it must address:
We believe this is a good association both from an ecosystem point of view as well as consumers, provided Microsoft is able to move faster and not get bogged down by the intricacies of the acquisition.