Microsoft Buys Nokia Handset and Services Division
On Monday, chiefs of Microsoft and Nokia published an open letter revealing that Microsoft is buying Nokia's "handsets and services" division: in other words, its smartphone kingdom. (And no, Nokia doesn't have a lot going for it aside from said kingdom.) Both Nokia and Microsoft currently occupy teeny-tiny spaces of the smartphone market, though their 2011 collaboration produced the Nokia Lumia smartphone line, which has seen reasonable success.
"Nokia and Microsoft are committed to the next chapter," said the letter, which also notes that reinvention "is in Nokia's blood."
"Together, we will redefine the boundaries of mobility," the letter concluded, dramatically.
Nokia Chief Risto Siilasmaa seemed less enthused. "Selling a business is sometimes the right cause of action," he told press Tuesday, "but it’s emotionally complicated."
Both Nokia and Microsoft have been forced aside in the smartphone arena for the last few years, thanks to the raging success of the Apple/Android-driven multi-platform operating system. (That's marketing speak for the fact that you reading this on an iPad, iPhone, iMac, or MacBook, or an Android device — or all of the above, we're not judging.) Unfortunately for the snake game purveyors, Nokia didn't make a successful transition from "dumbphones" to smartphone, and is no longer a top-five smartphone manufacturer. In Asia, the company's share in the market has dropped from 64 percent to a very awkward 1 percent in three years. That's gotta be some sort of record.
Microsoft still reigns as hardware king, but has struggled to produce an operating system that people actually use across platforms, à la Android. Its Windows Phone has overtaken BlackBerry (though that's really not hard to do these days) but is mostly popular overseas. And so, two years ago in February, we met the Nokia Lumia — a Nokia handset, powered by Windows 8.
The Nokia Lumia devices haven't sold badly, particularly abroad, but they're small fry (to say the least) in the face of Apple and Google's influence over the market. Nokia and Microsoft have, therefore, adopted an "If you can't beat 'em, join 'em" mentality, and are hoping to gain a foothold in the über-competitive market by combining their talents: Nokia's gadgets, and Microsoft's hardware.
Analysts have been predicting the buyout for some time: Nokia's chief executive was a top exec at Microsoft until 2010, and thanks to the resignation of Microsoft leader Steven Ballmer, he's now tipped to lead the merged companies. The cost of the sale is rumored to be close to $8 billion, a similar figure to when Microsoft bought Skype for $8.5 billion. It will cost Microsoft $5 billion alone to buy Nokia's handset division, and then a couple more to re-patent everything as Microsoft's.
Meanwhile, September is set to be an exciting month for techies. At Berlin's IFA conference (an acronym for Internationale Funkausstellung, if you were curious) Sony and Samsung are expected to unveil their brand-new smartwatches. And though Apple is far too cool to ever attend the IFA conference, it has an event of its own Sept. 10, which essentially means that a week from now you can order your brand-new iPhone. (Which, according to new leaked photos, you'll be able to get in pink, blue, red, yellow, gold... The mind boggles.)
Verizon is also in talks to buy out British network giant Vodafone, which would tip the scales at $125 billion or more, making it one of the biggest acquisitions in history.