Nokia Sold to Microsoft: A Good Move for the Software Giant
Nokia Sold to Microsoft: A Good Move for the Software Giant
Nokia has just sold its handset business to Microsoft in the past few weeks. Due to problems with the Income Tax in India, however, the Chennai manufacturing unit was not included in the deal. Still, it is quite a good acquisition for Microsoft that wants to capture the growing market in this consumer segment. The value of the transaction was held by Nokia to be higher than the previously arrived figure of $7.2 billion. Nokia which is based in Finland will be selling off its Devices and Services business to Microsoft in the coming September.
Microsoft CEO Satya Nadella has released a statement about the focus of the Redmond based software group to be on mobile-first, cloud-first segments. The Nokia mobile phone business is all set to bring in more profits for Microsoft. Microsoft has always been synonymous with the best technology. Its Microsoft Word program is used across the globe by writers, publishing professionals, editors and office goers across different industries. Microsoft is known for its superior technology and amazing talent. It is a leader in the field of software development.
This software giant is looking to break the affordable mobile device market through the acquisition of Nokia mobile phone business. The market for mobile phones is valued at $50 billion per year.
The Chennai plant will manufacture devices for Microsoft under a service agreement. Had it not been for the asset freeze in the Chennai manufacturing plant, it too would have fallen under the ownership of Microsoft. As the transaction has been closed, this plant will remain part of Nokia. Also excluded from the Microsoft deal is the Masan plant in South Korea. It had around 200 employees and it has been closed down. Nokia has offered programs of support and financial assistance so that the human resources aspect is taken care of.
But no business can be successful unless it is raking in profits. Nokia has taken a crucial step of finding a reputed buyer so that it gets adequate compensation. However, it seems almost as if an era was over when Nokia let go of its mobile phone manufacturing business. Nokia has always been a leader in the market when it comes to high quality mobile phones at reasonable prices.
But the Finnish company’s troubled device division was a major liability which Microsoft has now purchased from it. Microsoft has also acquired its smartphone and mobile phone business as part of $7.5 billion deal. This is a deal that also includes the design team, manufacturing and assembling facilities and operations. Sales and marketing support services have also come under Microsoft now.
Nokia led the mobile phone market for decades because of its superior technology and amazing features. It had peaked during the year 2008 when it had acquired a market share of over 40%. Nokia will now focus on important aspects such as networks, technology development and licenses as well as mapping services. It has to carve out a niche for itself in many new and developing areas. To some extent, the mobile phone market has a tremendous potential to expand. However, garnering success is all about outdoing rivals when it comes to quality and features. Advanced technology should also be easy to use. Only then can it find a strong connect with clients across developed and developing countries.
Microsoft will now be undertaking the management of 25,000 employees of Nokia in around 50 countries. Nokia’s share price went up after the acquisition. Microsoft aims to be a devices and services company so it can deliver a good blend of services spanning the entire gamut of products. Microsoft and Nokia have worked together before on the Lumia line of phones.
The Lumia line-up is now under Microsoft too. This software giant is also buying patents from Nokia. Of course, the amount involved in the transaction is less than that paid for Skype. But, things are looking up for Microsoft even as this software giant goes from strength to strength. Microsoft has the capacity to forge ahead and enable consumers from all over the world to access new heights in technology. Its strategies and acquisitions are well in line with this aim.
