Rumor: Microsoft To Buy Nokia For $30 Billion
softsailor.com
softsailor.com
For those who can read Russian, check out his blog at http://eldarmurtazin.livejournal.com/ or even http://lurkmore.ru/%D0%9C%D1%83%D1%80%D1%82%D0%B0%D0%B7%D0%B....
This is a quote from Engadget: "We're inclined to believe there's at least some semblance of truth to Eldar's words because of his track record. Way back in December of last year, when nobody believed Nokia would deviate from its Symbian strategy, Eldar reported the similarly incredible-sounding news that Microsoft and Nokia were in discussions about the latter using Windows Phone as its main smartphone OS. That turned into reality this February, and more recently, the Russian mobile spy managed to also accurately predict Nokia killing off the Ovi brand in favor of an eponymous naming scheme for its services. And that's all on top of Eldar's knack for obtaining Nokia prototypes way ahead of release."
Still, to me his track record also includes numerous cases where he was plain wrong and/or heavily biased - e.g. he was well known for trashing iPhone/iPad and praising Nokia until some time ago when he suddenly changed camps and now does the complete opposite thing.
What matters to me is good vs bad journalism - ability to acknowledge one's mistakes, checking one's sources, not trashing one's opponents, etc. etc.
So chill out a litte with the hating. (Of course, given that I've owned and used almost exclusively Apple computers for the last thirty years, everything I write may very well be just as subject to the same "fanboy" well-poisoning gambit.)
A recent linked piece nailed Apple's strengths and weaknesses: If Steve uses it, it generally rocks. If it doesn't, it could very well blow e.g. Ping.
One of them is not. It's been long obvious Symbian was a dead end. Phones are getting more powerful and Symbian was targeted to very simple chips. As processors got more powerful, it became comparatively harder to scale Symbian up than to simply use Linux or other Unix like kernel that would be perfectly at home on a 32-bit, multi-megabyte RISC machine (more or less like the first Unix workstation I had on my desk).
(Disclaimer: I work for Nokia.)
(Disclaimer: I don't work for an international tax avoidance consultancy)
Making a bad investment for the sake of investment strikes me as foolish. It's not clear how good an investment it would be, but it should be clearer a year or two down the line
1) Microsoft's $42 billion cash balance in Europe, $33 billion after Skype purchase
2) Microsoft's success with the Xbox model
3) Microsoft's looming failure with its current WP7 strategy
4) Nokia's patents and Navteq are incredibly valuable for the fight ahead.
Such a purchase would fundamentally change the landscape though. And that may come back to bite Microsoft by pushing everyone else even closer to Google. But maybe that's a moot point. Everyone has already made a broad strategic shift to Android and was only making a small hedge with a WP7 device or two.
EDIT: Looks like there's a half-denial from Nokia's Mark Squires
http://twitter.com/#!/DrPinball/status/70119002344660992
But as a 'Comm Director' he's in the business of spin and not necessarily with the deal makers. No doubt it's easy to dismiss the rumor. It's so big you have to approach it with skepticism even for the people involved.
And unlike PCs, since subsidies dominate much phone pricing, at least in the influential US, a race to the bottom in pricing means very little. The cost of the phone is dominated by the plan cost -- therefore a lot of OEMS competing on phone cost helps very little. And as Apple has shown, a single popular phone can demand better pricing in the supply chain.
If Microsoft purchased Nokia and they would play their cards right, they could build a really credible competitor to the iPhone, with total control of the stack. They could also sell these phones through their huge network of partners, subsidized (as they did with the XBox), but without a 2-years contract.
Basically - subsidized high-quality WM 7 phones without 2 year contracts + Skype preloaded == the bomb, and if Microsoft did this ... holly shit !
BUT, I'm not seeing Microsoft doing it. And if they'd do it, chances are they are going to screw everything because of internal politics.
The strategic alliance wasn't with Nokia -- it was with RIM. RIM was the company who understood how business people thought, and imagine a .NET binding for Blackberry development. Build your backbone on Windows, a .NET view for the desktop, and one for the blackberry, using the same interfaces easily.
Now, small moves (such as Bing defaulting as a search provider and better Exchange integration) have been announced this year, but not the big money sunk into Nokia.
As others have mentioned, this is also a way of keeping their money in Europe and avoiding taxes by exporting it. RIM might have been a better strategic alliance, but they are a Canadian company, so it would be hard to buy them while keeping the money within the EU.
The part I don't understand is how NSN is supposed to survive without the dumb/smart phone divisions to support it. Ever since the Siemens merger the network business has struggled, and it's hard to see how buying the remains of Motorola's network business is going to help them. Meanwhile Huawei is eating both Ericsson and NSN alive.
That MS doesn't care about the nominal OS fee they currently get (the milk) as, even accounting for FUD, Android has to be keeping very low.
But they likely want some of the app/media marketplace, the usage data, the navigation services, etc.
Assuming 90% of Nokia is mobile-related. But mobile is: 45% ($14.4B) handsets + 45% ($14.4B) networks. Then $30B for NOK handset business is more than 100% premium to market.
Ericsson sold their handset business to SONY and still has large networks business.
On the other hand, what if Microsoft bought HTC? They've worked with Windows Mobile phones in the past, they make some of the better non-Apple smartphone hardware, and they'd be a lot cheaper than Nokia. Android would lose a big manufacturer (no more Evo phones), and Microsoft would gain one. I don't know enough about corporate acquisitions to know if this is a practical option though...
http://www.asymco.com/2011/04/26/2895/
P.S. Microsoft has ~$49B cash on hand.
It's good for the industry because maybe, finally, it'll be the factor that causes a cross-platform video solution to be adopted by the major players.
Best case scenario for Microsoft is they hold fort and just don't make any money off it. I'd love to hear why you think this is good for them.
If they manage to integrate it gracefuly in their office & collaboration stack, without ruining it as a standalone product, it may very well be a winner for them.
Indeed the challenges are huge but I believe this is the right time for challenges at Microsoft.
With this purchase, along with the Skype purchase, Microsoft owns the hardware the user has, the operating system it uses, the calling software and user base.
All that's missing is a mobile network.
I suspect desktop skype will stay free and unchanged, but IOS and Android skype will be gone soon.
The reason to buy skype is for it's name, not for it's tech, as everybody agrees it's tech is not worth $8B. The name is only important if it gets you something. It will get you phone sales if you're the only one offering it on a phone.
Now, what's more likely, is the way Google handles it's Maps, Nav, etc: It's available for iPhone but it's way better on Android.
No-one would switch to WP7 just for Skype either. I suspect that MS will try to capitalise on the users on other platforms by attempting to up-sell them on other services. Perhaps a premium service for business users.
Then MSFT will use Skype for extortion.
It will threaten cellular operators to pay them to disable Skype or make it WiFi-only.
"The KDE Free Qt Foundation is an organization with the purpose of securing the availability of the Qt toolkit for the development of Free Software and in particular for the development of KDE software. It was originally founded by Trolltech and the KDE e.V. in 1998. After Nokia bought Trolltech, statutes were updated accordingly."
http://www.kde.org/community/whatiskde/kdefreeqtfoundation.p...
AT&T buying T-mobile. Microsoft buying Nokia. Ugh.
Quality obviously is not a guarantee of success.
Nokia is not a "great mobile brand". It was a great mobile brand, that then couldn't realize that software was beginning to win the smartphone war, and lost. Badly. Nokia's entire survival has rested on budget phones to developing countries, and that's a market that is not going to win you margins (or loyal customers). I would like you to point me at what you perceive as Nokia's "quality" in the last five years.
Microsoft, on the other hand, developed a great mobile OS in WP7, have been screwed (as I think everyone expected) by their network/manufacturer partners, and placed in the Android-like position they were trying to avoid. A full buyout of Nokia would be win-win for both companies, and a win for consumers too, who get the very decent WP7 software, with Nokia's very decent hardware design.
That's rich.
I pointed this out on another discussion: If we take South Africa as an example of this sort of developing market, then Nokia is in big trouble. BBM, coupled with "unlimited" BIS is wiping them out in the middle-lower end of the market. The very poor will continue buying their phones, for now.
RIM just announced a recall of Playbook. They're going downhill fast - perhaps if they get DalvikVM running flawlessly, that can be their lifeline until they can get their Flash based apps going/ported - IMHO, a long time in the making before any of this happens, so I think they're due for a downhill roll for a while before they come up, if at all ...
Android and Apple are pretty much eating everyone's lunch for now. Android's strength is its 'openness' (however ill-perceived that may be) and Linux. Apple's is its control over hardware and software.
MS could be looking to become like Apple here... control the hardware as well as the software. It might work - but in my view, they are at least 2-4 years away from having a platform as stable as iOS or even Android, which is relatively new.....
It's a tough call. Probably money well spent, but they can't afford to fuck up the execution. It's gonna require Ballmer to not sleep at night and lose whatever hair he's got left....
This could be a confirmation of the rumors that WP7 sales are poor, and they seek to pivot towards a closed arrangement.
"The Nokia tune (also called Grande Valse on old Nokia mobile phones) is a phrase from a composition for solo guitar, Gran Vals, by the Spanish classical guitarist and composer Francisco Tárrega, written in 1902. [...]
The tune is heard worldwide an estimated 1.8 billion times per day, about 20,000 times per second."