Microsoft has agreed to buy Nokia’s cell phone business, the patents and bring 32,000 employees aboard for about $7.1 billion. Nokia’s current CEO Stephen Elop (a former Microsoft employee) will also come aboard and some company watchers think he may assume the role of Microsoft CEO from the departing Steve Ballmer. This move seems eerily reminiscent of the Google acquisition of the Motorola cell phone business in May of 2012.
The amount of money and people involved clearly shows that Microsoft is very serious about succeeding in the mobile arena. Until now, Nokia was their top partner, making phones based on the Microsoft Windows mobile operating system. Both companies have been struggling and while the Microsoft-based Nokia phones have seen some growth in the smartphone market, they still lag far behind the Apple and Android operating systems. Putting the companies together could prove to be a very smart move, but could also end up being a financial disaster if the Windows smartphones don’t start to improve market share in the near term.
This acquisition will be good news to Nokia employees and stockholders and if Elop takes over for Ballmer, it could also be good news for Microsoft employees and stockholders. Keep in mind that the technology landscape is shifting quickly and the mobile market is far more important and profitable than it was just a few years ago. This shift comes just as the personal computer market is shrinking under assault from tablets, laptops and mobile devices. Microsoft is in no immediate danger of going under, but if they don’t start to rethink their model and improve their offerings, they may go the way of such past PC giants as IBM. While that company is still viable and profitable in many areas, they have gone completely out of the personal computer arena choosing to focus on software, services and huge computers for business and academia.
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