Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

Nokia sale is a good deal for both parties

Story highlights

  • Nokia had a tough few years before Elop slowly started to turn it around, says Stuart Miles
  • Deal will benefit Microsoft the same way that making smartphones has for Apple, he says
  • Not much will change in the short term, but Surface tablet "likely to be rebranded or ditched"
  • Microsoft's ambition to become hardware company is well and truly realized, Miles says

It's the deal that's been rumored since Stephen Elop joined Nokia from Microsoft three years ago, and now it's become reality. Microsoft is to buy Nokia, and become a phone manufacturer ... for the second time.

That's right, Nokia isn't the first phone company to be bought by Microsoft. It bought Danger in 2008, which it then used to launch the Microsoft Kin phone. That effort lasted around nine months before the whole adventure got canned and the world moved on.

This time around promises to be different.

Nokia, which was the number one seller of mobile phones globally in 2007, had a tough few years before the stewardship of Elop slowly started to turn it around.

    Just Watched

    Microsoft to buy Nokia's phone business

Microsoft to buy Nokia's phone business 03:21
PLAY VIDEO

Watch more: Microsoft to buy Nokia's phone business

    Just Watched

    Who will replace Ballmer at Microsoft?

Who will replace Ballmer at Microsoft? 01:47
PLAY VIDEO

The Lumia range, which now includes half-a-dozen handsets, is still a minnow in the smartphone world in terms of market share, but it is slowly gaining traction. More and more people are going Lumia.

    Since its rebirth, Nokia has over taken BlackBerry in around 34 markets, according to the company, and things are looking up following the success, in relative terms, of its latest batch of Lumia handsets.

    The race is far from won, but at least, unlike BlackBerry, it is heading in the right direction.

    The deal will likely benefit Microsoft in the same way creating and making smartphones has for Apple. The Cupertino-based company has for the past six years been able to make phones, market them, and sell them in its own stores.

    As retailers throughout the last century can show (Marks & Spencer, Sainsbury's and Dixons in the UK,) if you make and sell your own products, the margins can be higher, and the profits better.

    As the world's austerity drive continues, every little bit helps, and Microsoft will be able to reap those rewards even more once it owns Nokia outright.

    So what next for both parties? Well not much is likely to change in the short term, but Nokia will more than likely move into the tablet arena a lot quicker.

    Likewise, Microsoft's Surface tablet is likely to be rebranded or ditched completely, in favor of something more Nokia-flavored. Microsoft will license the Nokia name for the next 10 years.

    Then there is the former Nokia CEO, Elop. Microsoft's CEO Steve Ballmer has announced that he'll be stepping down over the next year, and Elop will surely have his sights firmly set on replacing him.

    Elop stepped down as Nokia's CEO on Monday to become the head of the company's devices and services business. He will continue leading Nokia's phones business as the devices chief at Microsoft.

    Whether you believe Nokia has done well or not, Elop has done a fantastic job at Nokia, and there's very little stopping him. Being a Microsoft employee will only help his cause.

    Perhaps Steve Ballmer wasn't such a bad CEO after all, especially considering that the $7.2 billion price tag for Nokia is less than the $8.5 billion it paid for Skype. This deal has just as much, if not more potential.

    But ultimately, by buying Nokia, Microsoft's ambition to become a hardware company is well and truly realized.