MICROSOFT must be nursing its head this morning and wondering what on earth it was thinking of last week. It wakes up today as the world’s second-largest manufacturer of mobile phones by sales, having shelled out €5.44bn (£4.48bn) to buy Nokia’s ailing handset business. Nokia sold 251m phones last year but saw sales in the unit fall 29 per cent in the final quarter of 2013.
It is an extraordinary move for a software company, and no more promising after contemplating its recent foray into hardware with the Surface tablet, the sales record for which has not been covered in glory.
When Google bought Motorola, at least it had the excuse that it came with a patent portfolio – and the search giant sold the rest as soon as it could. Nokia is keeping its intellectual property, and included in the price is the €1.65bn that Microsoft is paying for licensing rights. Nokia does account for nine in 10 smartphones sold running Microsoft’s proprietary Windows operating system. However, that isn’t many: 30m units last year, or 12 per cent of Nokia’s phone sales. And as the latest figures show, there are signs that Windows phones may now be on the decline in Europe.
Is there any hope? If the unit can move its focus from feature to smartphones and think beyond Windows OS, perhaps Microsoft Mobile can promote the group’s cloud and web services. The Nokia X Android phones with default Bing search show how this could work. But mostly it looks like a headache.