Microsoft officially takes on the Nokia Baggage

As of today Nokia as a company is no more. It’s been over eight months since the deal was first breed.  Microsoft officially takes on the Nokia baggage today. And they will pay €3.79 billion for Nokia’s phone making business, plus another €1.65 billion to license its portfolio of patents. This makes a total of around €5.44 billion (around $7.2 billion). This deal makes Microsoft take control of more than 90 percent of all Windows Phones with Nokia’s Lumia smartphones, and the baggage will also include  the low-end Asha brand, Android-based Nokia X handsets, and feature phones. Microsoft overnight will be  responsible for shipping more than 200 million handsets a year with an extra 32,000 employees moving across from Nokia.

A MICROSOFT MOBILE WORLD

Microsoft is planning to use the “Microsoft Mobile” cognomen for the Nokia phone business, and says will run it as a separate entity. It’s clear Microsoft needs Nokia’s phone making skills and they really have several tough decisions to make ahead as they merge. Microsoft was expecting to complete this deal bu January but due to regulatory approvals and other issues the deal was delayed for four months.  As a result, the original deal had Microsoft acquiring Nokia’s Korean manufacturing facility and an Indian handset plant, but neither will be fully acquired. Although rumor has it that the facilities in Indian may not be part of the deal due to ongoing tax disputes.

WHAT HAPPENS TO NOKIA’S ANDROID & FEATURE PHONES?

Microsoft’s devices are clearly windows driven, and they distribute the windows phone license to other manufactures. So one wonders with what they will do with an Android product on board.  Last year alone Nokia sold nearly 251 million handsets, and this was a combination of both feature phones and smartphones. The Lumia Windows Phones only accounted for 30 million of that 251 million, this means Microsoft now has to plan and manage how it handles the remaining millions of other devices that Nokia produces that are none Windows Phone. With Asha handsets, feature phones, and Nokia’s new Android-based X range. This as the magic that kept Nokia in second place behind Samsung in the top mobile phone manufacturers. And this in turn makes Microsoft the world’s second largest phone manufacturer going by sales alone.

The controversial Nokia X introduces a new messed up version of Android, that introduces a Windows Phone-like UI and an Android store that’s separate to Google Play. This gives Microsoft another Nokia baggage of managing another app store, but also a solid opportunity to push its own cloud-based services. OneDrive, Outlook, and Skype are all preinstalled on Nokia X handsets, and Bing is the default search engine.

The new Microsoft CEO Satya Nadella is pushing for a “cloud first, mobile first” approach, which recently gave birth to the Office on iPad making Microsoft come out with a revived approach as they start to leverage platforms outside of Windows to push and sell services. Shall we see some of Microsoft’s services on feature phone? Microsoft believed that with is new approach everything is possible.

CONFLICTS OF INTEREST

When Google sold off Motorola to Lenovo, it was seen as a away in which it would prevent conflict of interest with other Android Manufacturers. Now that Microsoft has an in-house hardware phone division, how will this affect relations with other OEMs.They have put themselves in a rather unique position by dominating Windows Phone hardware, while also producing the software that runs on rival devices from phone manufacturers like Samsung and HTC. Microsoft is busy bring other OEMs on board and have reached an extent of luring them by giving them free software licenses to encourage adoption of the

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platform.

So when a new version of Windows Phone is to be released, who will get priority for the licenses? There is defiantly a conflict of interest on prioritizing the shipping of its own hardware to compete with its own licensees, while still maintaining a healthy platform. Could Microsoft be that company to manage to do what Apple failed with the original Mac?

Whatever happens no matter how Microsoft handles the tricky balance of making the phones and licensing the software, very many decisions have to be made. Nokia has released one Lumia tablet running Windows RT, which was seen as the same product at the surface RT. So what will they choose? Surface or  Nokia’s Lumia tablet design? With too many questions and fewer answers required, Microsoft still has a heap of tough calls to make.

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