Tuesday, September 3, 2013

A Week After Balmer's Pending Resignation: Nokia Sells Mobile Biz to Microsoft

You have to assume that Nokia's $7+ (some say $7.1 billion and other say $7.2 billion) sale of its mobile business to Microsoft, allowing Microsoft access to its name, some mobile tech like mapping, and licenses to use its patents, had been in the works long before Steve Balmer offered (or pushed out) to resign as CEO of Microsoft.  Still, the announcement was likely timed to avoid getting bumped off the front page by Balmer's news.

And this is probably part of new plan at Microsoft to compete against the likes of Apple's iPhone/iPad and Android which has thoroughly dominated the mobile market - with Android taking around 70% of global smartphones shipped and Apple selling over 50% of tablets while Windows based Surface caused Redmond to write down nearly $900 million and forcing Microsoft to permanently cut the price of the ARM-based version by $150 and the Intel version by $100. 

I'm thinking there's going to be additional write-downs for Microsoft in the coming quarter. 

Now, there have been rumors and suggestions from all corners of Wall Street, media, and armchair bloggers that Microsoft should be Nokia for one reason or another.  These flood of articles has paid for many meals, mortgages, and college tuitions for dozens if not hundreds of writers because they were at the same time making sense and also polarizing.

Made sense because Nokia was going nowhere with its own effort prior to Windows Phone and only managed to tread water after the Lumia brand came out.  Imagine what would have happened had Nokia gone with Google's Android instead.  Maybe they should have been the ones to buy Web OS instead of HP.

At the same time these posts were polarizing is because Microsoft fans and supporters did not want talk about potential Windows Phone failures or how Microsoft had to bribe Nokia with hundreds of millions to get them to use it.  And in a sense, it was this or nothing for both companies.  If Windows Phone fail, it was pretty much it for Nokia and Microsoft likely would have to forget about being a mobile player and would have only its Windows and Office biz to milk from. 

What's scary is that it has happened - Microsoft with a large part of Nokia.  It's likely this was forced upon Redmond.  Nokia was sunk and Microsoft was told to hold the bag that is the Windows Phone market.  For a while now,  Nokia wanted out of the market.  Lumia phones were decent but had many shortcomings while providing an interesting new UI offered almost nothing new that the iPhone or Android devices didn't. 

And oh, no apps in the phone store.  No good apps I wanted (I have a Lumia device too).

So, Microsoft was forced to spent more than $7 billion to remain a player fast and brutal mobile market.  I agree it had to make this move but we're here today because of the news from a week or so ago:  Steve Balmer.

Balmer, genius and brilliant in his own right, was the reason why it cost Microsoft $7 billion today.  And the sooner he is able to leave and give a new CEO more time to come in and make the necessary changes, which will take time and even billions more, the better off Microsoft is in the long run regardless of whether Windows Phone will catch on or not. 

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