When Stephen Elop moved from Microsoft to Nokia, some speculated Elop’s job was to make the Nokia brand insignificant, allowing Microsoft to pop in a few years later and acquire the company cheaply, bringing back Elop and some other executives to the fold.
This idea has been denounced by most, but in the end, either directly or indirectly, Elop has managed to do exactly what the speculation said. Microsoft has acquired Nokia’s Device Division, around half the Finnish company, for $7.71 billion.
It is a questionable move at a questionable time and arguable in favour of Nokia more than Microsoft. Redmond will be welcoming another 30,000 employees to the fold, while Nokia cuts costs in half and works on telecommunications and services, two areas without huge cost factors.
Microsoft will gain all Nokia’s devices, future devices, device patents and has set up deals with Nokia for HERE maps API, along with ten years of non-exclusive patents from Nokia, as part of the deal. Elop and some executives from Nokia will transfer over and join the device team, currently run by Julie Larson Green.
With this first party hardware developer, Microsoft is now in deep on the hardware end. From a software company with no hardware for a solid twenty years, Microsoft now offers Surface, Xbox and will now offer Windows Phones to consumers.
The restructure in Microsoft will change once again in the hardware department, Elop will take over the hardware division while Julie Larson Green will work on Surface and Xbox. Steve Ballmer, the retiring CEO of Microsoft, has said naming of Nokia devices will change and the deal is set to close on early 2014.
In the grand scheme of things, this may be a score for Microsoft, who can work on hardware and software development under the same roof. If Microsoft get this right, they may be able to push updates and new smartphones out faster, although this may put off possible hardware partners.
Comparing this to Android, this would be like Google announcing they have just bought Samsung for X billion’s of dollars. We wonder how other Android partners would react, especially when Google got a negative response for acquiring Motorola for $12.5 billion in 2011.
Nokia is set to launch the Nokia Lumia 1520 sometime at the end of this year, after that, we believe the two companies will merge and Nokia/Lumia will no longer be a recognised brand. Microsoft has always looked for simplicity, perhaps just Lumia with no numbers.