Late Monday night, the tech and business world’s went crazy with the news that Microsoft was purchasing Nokia’s devices and services business.
The estimated $5 billion purchase spurned a ton of news on Tuesday, and further explains why Microsoft made this bold move. The move shows that they want to be in full control of the smartphone business from design to production to the end product. With this purchase, Microsoft can own the factories, the design process, and the end product, much like Google and Apple do today.
Talks In Motion Since February
In a Bloomberg article, news about the talks between Nokia and Microsoft were being done as early as February. According to the report, by July, the framework of the deal was done and that due diligence was being one to finalize the deal. Further talks, finalizations, and code names like Nurri led to it being done.
Rushed Due To Steve Ballmer Retirement Announcement
Many in the business world wonder whether this announcement was rushed due to the recent Steve Ballmer retirement announcement. Stephen Elop, a former Microsoft executive is running Nokia’s business, and will return to Microsoft to oversee the new devices division within the new company. Some speculate whether Stephen Elop could be the new CEO, and some have left that news aside.
Frist Rate Smart Phone Experience
One of the main reasons for the purchase was to bring Microsoft a first-rate smart phone experience. By being able to make more per handset from this new arrangement, an estimated jump from $10 to $40 per handset, and extra revenue for the company, Microsoft can easily justify the purchase. By using money already held overseas, there was minimal taxes paid on this money, and they used that to purchase the portion of Nokia that it saw as a strong strategic investment.
The purchase of Nokia’s devices and services business was a strong and bold move by Microsoft. The move easily assures that Microsoft will own the process from start to end, and that they can start building the right smart phone or tablet. Whether or not this gets done though, is questioned by many and by many investors on Tuesday.