Did Microsoft just dodge another bullet, this time with Nokia?

Did Microsoft just dodge another bullet, this time with Nokia?

Summary: Microsoft supposedly has walked away from 'advanced' talks to buy Windows Phone partner Nokia. Will this look like Redmond's choice to abandon its Yahoo buy-out, in hindsight?

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Remember when Microsoft very nearly bought Yahoo for close to $50 billion? Months after that deal fizzled, Microsoft execs were quick to claim credit for dodging that bullet.

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On June 19, the Wall Street Journal reported that Microsoft was in "advanced" talks to buy Nokia. But, according to The Journal, the talks have broken down and are unlikely to be resumed. The Journal's report follows by a day another report that Huawei might be considering buying Nokia.

I am not a Nokia hater. As one of the three percent who own a Windows Phone (by choice, not obligation), I am glad there's a handset maker out there championing the Windows Phone platform. I haven't loved the Nokia phones I've seen to date -- and that's why I currently sport an HTC 8X. (The weight/bulkiness of the Nokia Lumia line, coupled with Nokia's AT&T-first policies have put me off, as I am a Verizon user.)

All that said, I am not surprised Microsoft may have dropped the idea of buying Nokia. Yes, I understand Microsoft is working to transform itself into a devices and services company. And so far, it doesn't have a whole lot of devices in its portfolio beyond its Surfaces, Perceptive Pixel displays and the Xbox.

But just as in the case of Yahoo, there's a lot of parts of Nokia that Microsoft may not really have wanted or needed. In Yahoo's case, there was lots of product overlap and job function redundancy.

In Nokia's case, while I'm sure Microsoft would be happy to grab some more camera patents, the Redmondians already have in place sweeping cross-licensing agreements with Nokia. Did Microsoft really want to pick up the Asha line of phones that are designed not to run the Windows Phone OS? Did Microsoft want all the trappings -- not to mention staff -- of a phone design and manufacturing operation?

Nokia already makes, for most intents and purposes, Microsoft's Windows Phone. Did Microsoft need to shell out billions to cement that relationship? Seemingly not. Does this mean Microsoft is now even more likely to market its own (possibly Surface-branded) phone? Perhaps....

Topics: Mobility, Microsoft, Nokia, Windows Phone

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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94 comments
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  • Nope

    I feel like Nokia has done more for Windows Phone in the past six months than Microsoft ever has. I would think it to be a godsend if Nokia were to take over Windows Phone development. Then we might actually see good updates at a reasonable pace.
    falcon304
    • some ideas

      That's one of the few ideas that make sense. The WP deal with Nokia is so one-sided for MS, why would they ever need to purchase Nokia? Same with buying Yahoo!. It's just senseless on the surface, unless the deal is expiring and Nokia is going to defect.
      solomonrex
    • Nokia got no choice!

      Mind you, Nokia got no choice anyway. After the demise of Symbian, it can't go Android as it will be under the shadow of Samsung like LG, Toshiba Sony. It has to find another platform, Windows 8 saved Nokia a lot of money on research and development and allowed it to focus on developing new phone and customised Apps. It is a mutual benefit relationship.
      Nokia has come better in this deal, it's selling phone more than any Android vendors apart from Samsung and 3rd largest smartphone seller.
      jonnybr
  • Nokia may be a takeover target by someone else...

    Maybe is trying to leverage the chance that others are interested in buying it, like Huawei. There's a lot of pressure from Nokia shareholders to switch to (or at least add) Android to it's portfolio. That would destroy Windows Phone in the cradle.

    Isn't it part of Microsoft's deal with Nokia that they get first dibs to purchase? If so, maybe Nokia had to make an offer to Microsoft first.

    Either way, if someone buys Nokia, then I hope Microsoft has some hardware in the pipeline that's ready to go... in the high AND low end. Windows Phone is just starting to gain traction.
    newyorkcitymale
    • Huawei has said publicly it would buy Nokia

      Interestingly enough, just 2 days ago Nokia "allegedly" wasn't on the market. Now we find there were talks of being them purchased.

      Since Microsoft bailed, that give credence to Huawei's CEO's statements. It might be an uphill battle since the Finnish govt will have as much if not more say than shareholders about a Chinese company owning Nokia.

      http://www.wpcentral.com/huawei-gets-brazen-says-it-would-buy-nokia
      tallbruva
    • Huawei cannot purchase Nokia.

      The Committee on Foreign Investments in the United States will not approve a purchase of Nokia by Huawei. See the Forbes article on this.
      z_saberman
      • HUH

        That was about Sprint being bought. The US will have a tougher time blocking a Chinese company from buying a Finnish company.

        Nokia built good hardware. Of course HTC phones are less "bulky" they are made from fragile plastic and regrettably break easily.
        LarsDennert
    • Don't be too sure that, given time, Windows phone cannot overcome ...

      ... Android's lead. After all, Android overcame iPhone's lead! There are lots of Android OEMs. Some will not survive but others will flourish. Samsung, a leading Android provider, also supports Windows phones. So does HTC.

      In Fact, Samsung has been an Apple partner AND a Microsoft partner for a number of years. Samsung will be around long after most of their competitors have gone broke or been acquired by others.
      M Wagner
      • Can't disagree

        What is worth remembering is that Tizen is coming at some point to Samsung. It won't happen overnight, but you can bet that Samsung will be ditching Android. When that happens, it is possible that Android will largely collapse. Samsung's hope is that they all come crawling to them to license Tizen (built on open source, but the SDK is heavily proprietary and requires licensing). Of course many Samsung competitors won't be thrilled to give money to Samsung.

        Microsoft is a solution for them, including for built in TV functionality. Tizen is powering Samsung's Smart TV features going forward. It would make sense for MS to deploy similar tech to the Sharp's, LG's, etc of the world (Sony would likely be too stubborn) and also license WP for the phones. WP8 for the phones and Windows Embedded 8 for other electronics devices. May be a hard sell, though one manufacturer stepping to the plate would not be a bad idea. They could add their own features through custom apps.
        Jeff Rickel
    • Takeover not easy when you're making profit

      If Nokia shareholders force it to sell Android phone, they will be digging their own graves. Just take a look at Sony, it made Xperia z phone, who cares? The same thing will be for Nokia, nobody would care about an android phone with good camera because everybody want Samsung S4.
      If Huawei thinks they can buy Nokia and turn it to android phone company, they are better up saving their money and burn it for heat in the winter!
      jonnybr
  • This rumor AGAIN?

    Hasn't this proposed buying of Nokia been out there for the last year?!?!
    Not gonna happen !!
    MS doesn't need a 3rd party owned product trying to compete with their other vendors wanted to sell their wp8 as well.
    JABBER_WOLF
    • We all like good customers just the way they are

      Nokia is a good customer of Microsoft. Why would Microsoft want to change that! Sure Microsoft made them feel like they had nothing to worry about because big daddy will come to your rescue. Well, Nokia, think again.
      Tim Jordan
      • And yet another excuse by Tim Jordan?

        Really? And how do you know that Microsoft made them feel like they had nothing to worry about because big daddy will come to their rescue.?

        Oh, you don't? Then why did you say that?

        What? I wasn't supposed to ask that? My Bad.
        William Farrel
        • Because nobody puts all eggs in one basket

          Normal OEMs don't put all their eggs in one basket. Nokia did. And guess why? Correct, they thought that "Big Daddy" was going to bail them out. Ballmer is a shrewd character.
          Tim Jordan
          • Nobody puts all their eggs in one basket?

            Really?

            You don't think -any- other company has done the same thing as Nokia. I'm giving you an opportunity to admit you're wrong.
            Michael Alan Goff
      • Why change good customer

        ... I guess RAMMING Stephen Elop down their necks was an act of friendship .... (laughing uncontrollably).
        BrentRBrian
  • I feel bad for Nokia

    You're absolutely right, Microsoft doesn't need to buy them because Windows Phone is all they have. I hope Microsoft don't screw them over by making a Surface phone though, that would be really awful.

    Excited for the EOS in a couple of weeks though; At the very least the Windows Phone team's seeming inability to do ANYTHING to update their OS properly (or at all) is forcing Nokia to innovate with some great software features and hardware.
    prettyconfusd
    • IMO

      Surface phone won't happen anytime soon. First, Nokia is doing a lot of hard work with the Lumia line. Pretty much all that Microsoft would have done with a Surface phone.

      Second, WP marketshare is still single digits and MS is not going to disrupt that by bringing in a Surface phone.
      Kunal Nanda
    • A Surface Phone with two cooling fans for noise

      Surface Phone :) Good one.
      Tim Jordan
      • Think they'll be able to hear over the din?

        :)
        CaviarRed