Microsoft to acquire Nokia

Demonstrating their continued commitment to both the mobile device and wider consumer electronics space in spite of flagging tablet sales, Microsoft have today announced their purchase of Nokia for a total of about $7.2bn. Despite the fact that the terms of the agreement stipulate that Nokia will continue to own and manage the Nokia brand, Microsoft will acquire “substantially all” of the company.

Beyond the headlines dominated by the all-cash buyout price, this means that Microsoft will acquire all of Nokia’s in-house patents (similar to the Google and Motorola deal over a year ago). Perhaps most crucially, the deal also includes Nokia’s long-term patent licensing agreement with chip-manufacturer Qualcomm being assigned to Microsoft. So not only do they get to utilize wholly the Nokia patent portfolio for the next 10 years (until at least 2023), they get already acquired licenses for 3rd party patents.

The question is now how Microsoft can leverage this new subsidiary to boost its market share in the mobile space. Despite some promising signs from emerging markets, the Lumia range still flags in developed ones and there will have to be real, concrete results in these to stand any chance of competing against the Android/iOS duopoly. Key to any success will be learning from the mistakes made by companies such as HP in their purchase of Palm or Google in their purchase of Motorola.

However, if Microsoft successfully manages to bring their Surface and Nokia’s Lumia engineers and designers together, the tantalizing prospect of an OS with the performance advantages hardware uniformity confers, alongside the general build-quality of Nokia hardware itself beckons.

Categories: Industry Research

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