Nokia sale: Analysis: Microsoft can now make its own phones - but it might be tough going
(Guardian (UK) Via Acquire Media NewsEdge) Risto Siilasmaa had been chairman of Nokia for 10 months when he took a call from Steve Ballmer that was to change the course of the company's long history. The Microsoft boss wanted to discuss the acquisition of Nokia's handset business. In the months that followed Nokia's board and its subcommittees met 50 times to agonise over the decision, exploring every possible alternative.
As the founder of a software company, F-Secure, Siilasmaa's background is in building businesses, and the decision to sell was not an easy one. "Being an entrepreneur means aspiring to build products that change the world," he said at an emotional press conference at Nokia's headquarters in Espoo, Finland, yesterday. "Selling businesses is not nearly as cool, but sometimes it is the right course of action."
Nokia's board claims to have decided only recently to offload for a mere euros 5.44bn Europe's last big handset maker, the tarnished crown jewel in an empire once valued at euros 200bn. Others believe the deal became a foregone conclusion from February 2011, when the Finnish company hitched itself to the Microsoft bandwagon.
The series of events that led to yesterday's announcement was sparked when Stephen Elop, after two years overseeing Microsoft's business division and its cash cow Office software, joined Nokia in 2010. Several months later Nokia announced it would give up developing its Symbian software platform in-house, and adopt Microsoft's Windows Phone operating system instead. The incentive, from Microsoft, was a badly needed cash injection of $250m every three months to spend on advertising and marketing.
Elop will now join Microsoft to run its devices division. With Ballmer having announced his resignation less than two weeks ago, the responsibility for making the deal work will fall to his successor.
Microsoft is projecting the Nokia merger will propel it to a 15% global smartphone market share by 2018, generating $45bn a year in revenues. At present the Windows Phone operating system is used in a mere 3% of smartphones.
The deal will bring 32,000 Nokia staff onto the Microsoft payroll, and is intended to rescue Microsoft from the oblivion it faces if its engineers cannot keep pace with the innovations at Google and Apple. Apple designs phones as well as the software they run on, Google has Android and now Motorola, and Microsoft will have Nokia to transform it into a major hardware maker.
Spicer warns this will be difficult to achieve: "There is a huge clash of cultures, not just between a software and a hardware maker, but between Finnish and American culture."
(c) 2013 Guardian Newspapers Limited.
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