Microsoft Corp Buys Half of Nokia Corp, Licences Much of the Rest

On September 3rd Microsoft Corp announced it has agreed to buy Nokia Corp’s device business and license a large part of the company’s patents and location-based services for 10 years. The move is a significant step for Microsoft Corp on the road to becoming a devices and services company.

We discussed the importance of Microsoft having its own smartphone device earlier this year. Despite gaining significant market share compared to 2012, Windows OS remains a distant third behind Android and iOS. Smartphone manufacturers have been reluctant to expand its Windows Phone lineup, which in turn, hurt the platform’s competitiveness.

ScreenHunter_01 Sep. 03 10.16

Source: Euromonitor International 

The acquisition of Nokia gives Microsoft an unprecedented degree of control over the final product, putting it in a better position strategically. The Nokia Device business now has access to a much larger research and marketing budget, and Microsoft Corp can leverage its suite of gaming, productivity and other services to grow the Windows Phone install base. Combining all of these elements remains a difficult task and success ultimately depends on the ability of Microsoft Corp to execute on this strategy.