Tuesday, September 3, 2013

Microsoft buys Nokia handset business. What were they thinking ?

On September 3, Microsoft bought the Nokia handset business along with a 10 year non-exclusive license to Nokia's patent portfolio.

So why did Microsoft decided to get into mobile design and manufacturing? :

  • Nokia is the only major handset maker shipping Windows phones, Microsoft was caught in a tight spot
  • Nokia is more than just a Windows phone handset maker, Microsoft has worked closely with Nokia in the past, creating some synergies between the two.
  • Microsoft's own attempts at mobile devices have failed, at present(Surface RT) and in past ( Zune, Kin), though they have mostly been criticized for their lacking software, not hardware!
  • Whatever critics advise, Microsoft  can't just abandon mobile however bad its failures in mobile seem to be. It needs to be get a foothold in mobile and it will do everything for that.

And why did Nokia agree to sell its handset business? :

  • While Nokia is still 2nd largest handset maker behind Samsung, it doesn't figure in top 5 in the lucrative smartphone handset makers.
  • It has come too far with Windows platform to go back to any other platform(read Android)
  • The problem with Nokia Lumia seems to be in software( shortcomings of Windows Phone 8), not the design, hardware or quality . And Nokia cannot possibly fix that.
  • Nokia have had its own problems with Microsoft.

The problem is, sadly, this deal doesn't fix anything that was wrong with Windows 8 phones:

  • A business known for its excellent design capabilities for mobile devices goes to a business known for its failure in making/marketing mobile devices. Sad!
  • The problem with Nokia Lumia phones is the shortcomings of Windows Phone 8. This deal doesn't change anything about that.
  • Nokia Asha(low cost featue phones) and others will probably get the boot. If Lumia fails too, even after all the valiant efforts by Microsoft, Nokia as a handset brand would die. Heart wrenching!

Only time and time alone will tell whether Microsoft is able to revive Nokia and it's own mobile strategy or whether Nokia will meet the same fate as HP's acquisition of Palm.