EFE piece from 20minutos.es translated into English for Anderson in the News.
Microsoft and Nokia, a deal between giants in need that is shaking up the industry
Microsoft CEO Steve Ballmer (left), shakes hands with Nokia president and interim CEO Risto Siilasmaa. (Markku Ojala / EFE)
- Microsoft finally closed the purchase of Nokia’s mobile phone division and now controls the world’s second-largest manufacturer of these devices.
- As a result, it has secured a platform for its mobile phone and tablet operating system, Windows Phone, which till now has been unable to compete on the same level as Android and iOS.
- The deal includes the sale of all assets related to the design and manufacture of mobiles and smartphones, R&D centers, and the transfer of 32,000 employees.
The long-awaited purchase of Nokia by Microsoft, which was made final this Friday, brings together two once undisputed giants that are currently facing difficulties, and marks the entry of a new player into the mobile phone industry, one who is in a position to make life difficult for Samsung and Apple.
Microsoft, which on Friday finally closed the acquisition of Nokia’s mobile phone division for 7.5 billion dollars, now controls what remains the world’s second-largest manufacturer of these devices. As a result, it has secured a platform for its mobile phone and tablet operating system, Windows Phone, which till now has been unable to compete on the same level as Android and iOS.
“Microsoft has acquired a lot with this purchase: manufacturing capacity, good trademarks (the Asha and Lumia series), global people such as Nokia’s former CEO, Stephen Elop, as well as a portfolio of patents”, professor Uday Karmarkar explained to EFE.
Karmarkar, from the department of Technology Management and Digital Economy at the University of California, Los Angeles Anderson School of Management, emphasized: “With the acquisition of Nokia, Microsoft has become an important force in the mobile phone industry”.
The deal, announced on September 3rd, includes the sale of all Nokia’s assets related to the design and manufacture of basic mobiles and smart devices, including the factories, the R&D centers and the transfer of approximately 32,000 employees. Nokia has also given Microsoft a non-exclusive license for the use of their mobile phone patents for 10 years, with the possibility of extending the agreement indefinitely.
“Along with Apple and Samsung, it is the only company that owns both the operating system and the devices, bearing in mind that Samsung’s operating systems (Bada and Tizen) do not have much penetration”, Karmarkar stated.
In the background______________________________________________________
In recent years both Microsoft and Nokia have watched as the markets they once unquestionably dominated escaped from them: in 2012, Samsung surpassed Nokia as the world’s leading mobile phone manufacturer, after the Finnish company had been on top for 14 years. As for Microsoft’s software, the undisputed leader in computers was unable to find its place in a mobile phone industry dominated by Android and iOS.
Karmarkar believes the areas in the world that will be most affected by the deal are India, China, Africa and Latin America, markets where, thanks to Nokia’s strength, Microsoft could achieve much greater penetration than it currently has. “The Nokia Lumia and Asha series, which will be continued despite the likely disappearance of the ‘Nokia brand’, are highly valued for their price/quality ratio, and some of the phones are truly low cost. This is very important in most parts of the world, although not as much in developed countries”, he stated.
According to this expert educator, “Microsoft will take over a greater portion of the entire global mobile phone market, although Android will continue to lead for quite some time”. “If Microsoft is able to move forward with the dual operating system phone model that they are working on (which operates with Android and Windows Phone), the situation could turn particularly interesting”, Karmarkar concluded.
Despite the doubts as to competition that this acquisition had raised within the sector, and which forced it to be postponed until this Friday, the deal has received the authorities’ approval in countries such as China and India, as well as the European Commission. These bodies studied the case and decided that Nokia’s and Microsoft’s assets in this market only overlap “slightly”, and that several “strong rivals, such as Samsung and Apple, will continue to compete with the merged company”.
Special thanks to UCLA Anderson's Professor Uday Karmarkar for writing this blog post.