Microsoft and Nokia: A gamble worth taking?

Does just over $7bn buy Microsoft a place at the mobile top table? Simon takes a look...

Just as Google found when it snapped up the Motorola mobile business, there are uncomfortable moments when the firm behind an operating system that's non-exclusively licenced dips its toe in the hardware market.

Still, there had been signs of Nokia arresting its decline. Furthermore, its willingness to aggressively price its phones and still laden them with features has worked in its favour (albeit it doesn't do its margins many favours).

Impact

So what are the ramifications of the deal? Well, firstly, Microsoft will find itself in direct competition with some of its own customers, something that it'll have to carefully negotiate. The Nokia handset business, and access to the accompanying patents, will be under Microsoft control, and the products that result from the reunion will use - as you'd expect - Microsoft's Windows Phone operating system. So, however, do other manufacturers. And just as Google found when it snapped up the Motorola mobile business, there are uncomfortable moments when the firm behind an operating system that's non-exclusively licenced dips its toe in the hardware market. And, in truth, it's far more than toe-dipping: it's a full on assault at the sector.

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Secondly, it sees Microsoft entering the smartphone hardware market, contrary to previous claims. Microsoft-branded phones are surely just a matter of time.

Thirdly, it arguably gives Microsoft its last big throw of the dice for some time in this particular market. It's little secret that its failure to fully embrace and succeed in the mobile sector has posed long-term questions for Microsoft, especially with a chunk of the market moving away from traditional desktop and laptop computers in favour of tablets (Microsoft's Surface range is enduring sluggish sales). And whilst on paper Nokia looks like a fairly weak competitor in the sector, Microsoft may just have the clout to do something with it.

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