Nokia Gives Microsoft Much More Than Just a Mobile Phone Maker
NEWS ANALYSIS: Microsoft gets much more than just a Windows Phone hardware maker in its purchase of Nokia's devices and services business.The announcement by Microsoft that the company would buy Nokia's cell phone division made plenty of headlines, but surprised almost no one. Such a move had been speculated about for months, and Nokia has been struggling for years. In fact, it seems clear that if Microsoft really wanted Nokia to keep making Windows phones, it would need a financial boost of some kind. But that could have happened just with a capital investment by Microsoft. So why buy a big part of the company? The fact is that Nokia fits in nicely with Microsoft's stated strategy of becoming a devices company in addition to a software company. In one sense, Microsoft has been a hardware company for decades with its Xbox game consoles, its mice, keyboards and Webcams. But these are not the core of a real contender in mobile hardware. That changed when Microsoft introduced the Surface tablet, a device that garnered broad acclaim for its well-designed hardware even while critics were blasting it for the Windows 8 user interface. While the Surface RT version hasn't sold well, apparently the Surface Pro, with its full version of Windows 8, is holding its own in the tablet market.
But Microsoft wants to do more than hold its own. The company must have more than a toehold in the smartphone and tablet market to keep from getting pushed out altogether. It needs its tablets to become hot sellers so its mobile operating systems will be widely accepted by users. Microsoft gets a better chance to do this by controlling Nokia's hardware business and patents.