September 4, 2013 in Business

Microsoft bets big with Nokia acquisition

Mcclatchy-Tribune
 
Securing access

Since Nokia accounts for more than 80 percent of the Windows Phone devices sold, Microsoft CEO Steve Ballmer said he felt the need to ensure access to devices made for the operating system, as opposed to simply making its apps available on the other platforms.

SAN FRANCISCO – Microsoft Corp. CEO Steve Ballmer on Tuesday touted the company’s $7.2 billion acquisition of Nokia Corp.’s wireless device business, saying the deal ensures future access to Windows Phone hardware.

Analysts see the deal as the software giant “doubling down” on its bet on devices, following initial forays into phones and tablets that have yet to meet with success.

The deal would be the company’s second-largest acquisition on record following its $8.5 billion buyout of Skype in 2011.

In a conference call Tuesday, Ballmer touted the acquisition of Nokia’s device business, which was announced Monday evening. The deal will give Microsoft ownership of its own line of smartphones and other mobile devices. The company hopes that will extend the reach of its core Windows franchise, which still rules desktop computing but has seen limited traction in the mobile market.

It also brings Microsoft more than 30,000 new employees, along with some of Nokia’s manufacturing facilities and access to a broad array of patents under a licensing deal. Nokia has been building smartphones for Microsoft’s Windows Phone operating system for the past two years – though Windows Phone still ranks as a distant third to the popular iPhone and Android platforms.

“We think we have made excellent, excellent progress with the partnership, and yet we also know we have a long way go and felt in balance that, together, this is the best approach for both companies’ shareholders,” Ballmer said.

The move comes as Microsoft is undergoing a major realignment, both in its top management ranks as well as the organization of the entire company, which has previously been focused on growing its lucrative Windows and Office businesses.

In mid-July, Ballmer announced a wide restructuring of the company, designed to emphasize a unified experience across services and devices. He then surprised investors less than two weeks ago by announcing his own plan to retire from the company within a year – once a replacement is found.

Some analysts noted that the Nokia deal essentially locks Microsoft into pursuing the device strategy – even if the new CEO would prefer another approach.


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