The Microsoft-Nokia Deal

Last Monday, it was announced that Microsoft is acquiring Nokia’s phone-making unit for about &7.2 billion.  The acquisition included patents and the licensing of Nokia’s world famous mapping technology called HERE.

The reaction of investors in the stock market was mixed.  Microsoft stocks went down while Nokia’s went up.

Specifically, $5 billion will be paid for the phone-making unit of Nokia and $2.17 billion on the licensing of its patents.  Microsoft will also absorb 32,000 Nokia employees worldwide including 4,700 people in Finland.  Nokia chief executive Stephen Elop, who previously served as an executive at Microsoft, will once again join the software giant, heading up the newly acquired phone-making division.  It is also rumored that he would be the leading candidate to succeed Microsoft CEO Steve Ballmer when he retires next year.

For years, Microsoft has always been mainly a software company with its Windows Operating System and several applications and programs incorporated into the IBM, HP, Dell, OEM hardware manufacturers and the like. 

The success of the APPLE, Google, and Samsung business models of combining control of software and hardware has prompted Microsoft to slowly change gear.

Making its own tablet Surface and incorporating its Windows Operating System in its X-Box devices were good starts.  Now with the acquisition of Nokia’s phone-making unit which include patents, it is definitely going full blast to acquire greater share of the tablet and smartphone markets currently dominated by APPLE and ANDROID (Google/Samsung).

The integration of Microsoft’s and Nokia’s mobile device production and global marketing would generating substantial savings, which could be used as possible incentives to application software developers and content providers.

As I write this column/blog, I received a press statement from

Seth Schachner who is the Managing Director of Strat Americas, which is a global digital media consultancy and business development enterprise.

He says, “The Microsoft / Nokia combination could mean a more unified, stronger approach to building the Windows Phone application environment. Before it owned Nokia, Microsoft previously may have had to "propose" apps to Nokia or other manufacturers who released Windows Phones, essentially only putting a toe in the water of app development, and likely emphasizing Microsoft's own apps--ie, an XBox mobile app. That's certainly not a strong mobile content strategy to differentiate its handsets. With a unified approach, it may be there there is more internal support and commitment to apps and content amongst the two companies, and there might be more marketing funds available to encourage and give developers an incentive to build apps for the new Nokia-Microsoft environment.  That's a potentially significant development.”

He further opines that  “if we see Windows Phones rolling out at the lower end of the pricing spectrum--picking up the volumes where feature phones usually dominated, particularly in emerging markets, that could have potential implications for growing their market share substantially. (For example, in Latin America, the Windows Phone has stronger market positions, #2 in some markets already. With lower priced handsets reaching the markets, it's possible they will build share.)”

Seth was the founder of Sony Music's Latin American Mobile group, based in Miami, where he developed innovative handset and mobile content partnerships for artists including Ricky Martin and Shakira. He was most recently with Microsoft Advertising, and was an early licensor of content for major carriers, during his days with Zomba/Jive Music. Seth has brokered some innovative embedded media deals with handset manufacturers and has a keen perspective on how the consummation of Microsoft and Nokia's businesses will shape media and entertainment deals for global handset firms and mobile carriers alike.

It looks like the battle is no longer just for hardware that includes design and features and software applications to go with the operating systems but also for content.

My barber says, “We want consumers to be CONTENTED not CONTENTIOUS.”