“So the deal that should have been done 2 years ago is at last completed: Microsoft is buying most of Nokia to take control of its smartphone destiny,” Mark Rogowsky writes for Forbes. “Despite saying kind words about having other partners in Windows Phone, though, this move will effectively end the Windows Phone licensing business. It will position Microsoft as a clear number three in the smartphone wars, but with a difficult decision. In combining the operating system and hardware under one roof, Microsoft’s smartphone division now looks like its increasingly go-it-alone Windows RT group and more like Apple.”
Apple “has eschewed ubiquity for profits, consistently garnering between 1/2 and 3/4 of the smartphone industry’s total earnings despite a much smaller market share,” Rogowsky writes. “It builds phones that have roughly $200 in parts and sells them to carriers for an average of more than $600. While that doesn’t mean the company is earning $400 per phone, it’s getting close to $300. The new low-cost iPhone 5C expected to be introduced on Sept. 10 won’t radically alter Apple’s modus operandi. Apple will seek a somewhat larger share of the market, but only if it continues to make significant profits every time the company sells a phone.”
Rogowsky writes, “But unlike Apple, the phones Nokia has been successfully selling aren’t high-margin, high-priced models. And they aren’t selling to Microsoft’s corporate customers either. Microsoft claims they are now a ‘devices and services’ company, but this is the least attractive part of the device business… Nokia lost hundreds of millions last quarter selling Lumias despite hitting a high in Windows Phone sales. While the company has high-end product, in the form of the 41-megapixel Lumia 1020, it doesn’t sell much of it. Nokia has been relying on deep discounting and emerging economies to grow its smartphone business. Objectively, there’s nothing wrong with that. In terms of stated strategy, though, it seems unlikely to get Microsoft where it wants to be.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]
Related articles:
Beleaguered Nokia to sell handset business to Microsoft for $7.2 billion – September 3, 2013
Beleaguered Nokia reports lower-than-expected revenue, Needham downgrades – July 18, 2013
Microsoft and Nokia can’t hide from the very, very ugly truth: Windows Phone is failing miserably – July 18, 2013
Nokia’s Stephen Elop: The worst CEO of all time – June 28, 2013
Fire Tim Cook!
This is what a salivating to comment guy but with empty brain posts.
And why? Do you think Apple, not Microsoft, should have bought Nokia?
Don’t you mean Steven Elop?
Really guys? Obviously he’s being sarcastic. I mean, c’mon, he’s “the joker”.
Zune Tang was a ‘joker’. This guy is just annoying.
…he might be a smoker and a midnight toker. But he isn’t having much success as a joker.
JAHW&SD
(just Another Hit Whore and Shit Disturber
FIRE the “joker” – he’s terrible at his job!
Seriously, this is only funny in the “dumb joke to see who gets annoyed” sense. In other words, only funny to fellow trolls.
Yes , Microsoft is just paying to do more business and get more market share which won’t pay back the original.
Life is hard; it’s harder if you’re stupid.
John Wayne
Bye bye Finland!
Nokia is Finnished.
There are ways to troll intelligently and with wit. This seems to be a troll macro.
A macro that votes as well. Becoming annoying seeing fire Tim Cook on nearly every thread
I don’t think this is going to help MS or Nokia very much but it’s a step in the right direction. MS should flip off their partners, make phones and build an ecosystem. Sure, it’s copying Apple but it’s a good idea. Let google be what MS have been for desktops except google they won’t be making anywhere near as much money, just being the free developer of the operating system for samsung. Google currently makes more money from iOS than they do from android.
What will Microsoft do with the extra 45000 Nokia employees? And what will Nokia do with its remaining 46000 employees and all that cash it’s getting from MS to support the devices and services biz that it still has left, that are also profitable and best in their class.
In FIVE years, Microsoft will be writing this off.
The MS Mole Steven Elop has destroyed over 50% of the stock value.
How many of the creative people have left?
After a “fair and balanced” round of MS evaluations, lots of smart people will be leaving. 😎
But I must admit that Baldmer’s departure, or retirement, is a step in the right direction. Perhaps not towards becoming more like Apple. But, some good news for MS. Gates was good, on the software side. Balmer fú€ked it up!
“Gates was good, on the
softwarepredator side.” Fixed your typo… 🙂“position Microsoft as a clear number three in the smartphone wars,…” With < 2% market share. Now that is really clear.
They can really write some good jokes, can’t they. 😛
This is kind of, how kids play fiancial board games. “Oh he’s got that,” no mater how much money I have or how much it costs, I am going to do it too.
Ohhh bankrupt. Wah wah wahhhhhhhhh.
Well done Ballmer. Found another way to waste money and add to your loss making divisions. Perfect. Keep up the good work.
Balmy is a genius — he’s setting up Eflop to take his crown as the worst CEO of all time, thus preserving his own legacy. Quite clever, handing over the captaincy of the Titanic just before it hits the iceberg!
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Damn! I thought there was a possibility of Microsoft buying Nokia and I missed my opportunity in buying Nokia shares. I would have just gotten in for the quick share jump. It sure is worth it to have inside information.
Why do Apple fans think that MSFT even wants to look like Apple? Nokia builds wonderful products, Window’s Phone is nearing 8% worldwide marketshare and the OS is by far superior to anything Apple has ever developed and this includes the highly Android influenced “Pastel” iOS7.
MSFT will be just fine as will Apple. They both do some things very well and others not so well but in the end they keep one another honest and that benefits us all. Tim Cook does not need to be fired and Bill Gates does not need to return as companies’ the size and scope of these two have huge reserves of talent that dwarfs anything a CEO can bring to the table.
I like a healthy MSFT! It’s good for the consumers!
It not that MS want to look like Apple it’s that buying Nokia IS a step towards being like Apple, just as creating surface was. The surface was a failure but I wish them all the best with phones. Hopefully if they’re going to make ads targeting a competitor they realize Google have the market share they have a better chance of stealing
Last week Nokia had 8% world wide market share. Those mostly feature phones weren’t Windows phones.
Nice try though.
“Why do Apple fans think that MSFT even wants to look like Apple?”
Because we went to the mall to visit the five year-old Apple store and noticed across the hallway a new store had opened. It looks identical to the Apple store except for two things, probably related:
1) There are no customers in it
2) The name on it is not Apple
This Trojan horse move will end Microshaft. HAHAHAHAHAHAHAHAHAAAHAHAHA!!!!!!!!!!!!
‘Nothing wrong with that’. So the more you sell the more you lose is good business practice then? I guess anyone can be in business on that basis as long as you have deep pockets. A tactic like that works only short term and the increase in market share of Nokia has been but a Fraction or that required even with its cheap profitless phones. This will now be great news for the likes of Samsung who always had to cover their ass re its Android WinPhone commitment in case the latter made an impact not that it would ever want to commit to the latter. Yes an option removed but there is no chance whatsoever that Nokia is going to compete with them at the top end and gain share there unless it can strangle Android altogether or any Samsung in house alternative solution.
This will be even less effective than Google purchasing Motorola. It’s just a $7.2B move ($8.2B if you include the $1B Microsoft paid to Nokia a couple of years ago to put Windows on its phones) to ensure Microsoft has some company, ANY company, willing to build its phones.
Sounds like zero dollars would have been too high. Good job microsoft (again)
Microsoft will have to make some serious changes to Nokia just to make the acquisition worthwhile. As it is they’ve just bought a lemon.
Well, on balance I think $7B for Nokia’s patents, design shop and distribution network is better than $12B for Motorola’s patents and assets.
Who does that leave to buy RIMM? Possibly Samsung, I suppose, once GOOG decides to stop supporting Android or pull it all in-house for Motorola’s use.
Both of them have to be looking at what happened to HP/Palm.
Beware the Forbes “Contributor Network”. They have a proven track record of not knowing what they’re talking about. See The Macalope’s coverage.