What’s Next?

Yes, it is a big deal! Microsoft is acquiring the Nokia handset business for $7.2 Billion. I have lots of reactions to this. Some minor and obscure, and others not so.

First, Microsoft (MSFT) is clearly committed now to a hardware strategy! WOW! Think about its 35+ year history of software and just OMG. Ok, sure it has nearly always sold MSFT branded mice and other minor add-on hardware for PCs. And earlier this year they introduced the SURFACE tablet in an effort to create a greater market interest for Windows8. But now MSFT is solidly entering the mobile device market, not just as a software platform provider but selling and marketing a full range of handsets and smartphones. I hope MSFT knows they have a lot to learn!

Ok, some of you are asking who is Nokia (NOK)?, and why is their handset business worth such a fortune? Well, until Apple (AAPL) entered the mobile phone business not so long ago (it was only 2007), Nokia was the #1 high-end handset vendor globally with 35% market share. They never had the same impact here in the US as they had in Europe and elsewhere. But when I was a director within Lucent’s Mobile Applications business (2001-2004), it was the Nokia handsets that had the features we wanted to use with our experimental and demo applications. Of course, Nokia didn’t make CDMA handsets, only GSM and early 3G/UMTS devices at the time, so it didn’t always work out for us (being Lucent, i.e. direct competitor with Nokia’s network equipment). Instead, we often ended up trying to use HP devices (with clucky PCMCIA cards – remember those?). Does anyone even remember HP making mobile devices? Noooo, me either…

So Nokia had a great device platform for its time. Often running neck and neck with that other innovative handset company – RIM, better known for their Blackberry – the first smart-ish phone; and similar to Apple, with a highly proprietary architecture. What RIM missed (very very sorely, now) was the move to allow mass creation of 3rd party applications (which I advocated for as early as 2002 – someday I’ll pull out my presentation from the 3GSM World Congress in Nice that year, and the following year as well). Nokia and RIM tried this, but too late. Both these handsets businesses are now on serious down swings. It will be interesting if MSFT can do something to save it; and save itself too, given that highly successful and powerful handheld devices have seriously limited the future of the PC… (Aside: I don’t think Google has learned very much, as yet, from its own acquisition of a handset business on a serious down swing…)

Then perhaps, of even more interest to some of you (i.e. ALU employees/retirees/shareholders etc.), is what will Nokia do with its cash windfall? That is, after they pay off the debt to Siemens…?

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