Microsoft Phones!

No Tech Tuesday today as I am pondering the big news that Microsoft is acquiring Nokia’s devices and services business. From glancing at the deal terms it is not clear to me whether this was really an offensive move (as Microsoft is positioning it) or a rushed defensive rescue of a failing company that was the only one making Windows phones at meaningful volume. Here is one line from the press release that suggests that it may have been an emergency: “Microsoft will also immediately make available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible notes that Microsoft would fund from overseas resources” (my highlighting).

There are lots of other fascinating aspects of this deal, such as the fact that Nokia is retaining its patent portfolio with Microsoft obtaining only a 10 year license initially, albeit with an option to extend this to perpetuity. Microsoft is, however, obtaining Nokia’s longterm patent agreement with Qualcomm. Furthermore Nokia’s HERE division, which provides maps and map related services (and arose in part from Nokia’s acquisition of Navteq) is not part of the deal. Instead, Microsoft is becoming a licensee and is contributing some patents to HERE. All of this can be seen as further evidence that the deal is all about the devices and an attempt to maintain HERE as an independent business (one that I would expect Nokia to now separate from the rest of Nokia and spin out as its own public company).

It will remain to be seen what all of this means for the consumer in the long run, but in the short run it guarantees the existence of Windows Phone. With RIM essentially gone, I find myself rooting for Microsoft and Windows Phone. It would be great to have at least a three horse race in the mobile arena, with potentially additional offerings coming from Samsung, Xiaomi and also Mozilla’s Firefox OS. For developers this will be a bit of a pain as they need to support multiple platforms but it will keep any one provider from getting too much power — and that will ultimately be be good for innovation (and thus good for consumers and developers).

Posted: 3rd September 2013Comments
Tags:  microsoft nokia mobile

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