This is an acquisition that arguably puts Microsoft mobile capabilities above that of Google's, and closest to Apple's. They're getting industry veterans with great design talent. They're getting a Lumia product that has the best build quality of any non-Apple smart phone. They're acquiring proven channels to access global markets. Both Nokia and Microsoft have been floundering in the mobile space recently; neither have had any real explosive successes. Together they might make some really compelling offerings.
I'm not a fan of their mobile OS, but I am a huge fan of Nokia's latest smartphones, and if Nokia design's talent can figure out how to introduce a better UI, I'd seriously consider getting The Windows Phone as my next smartphone.
This is an acquisition that arguably puts Microsoft mobile capabilities above that of Google's, and closest to Apple's.
To have this loltastic sentence at the top of hn makes me wonder if MS or some PR has a bunch of shill accounts they roll out for occasions like this. Seriously? As the other reply said, they were already together. And losing. Badly. And hated, broadly.
And the reason the windows phone sucks so badly is that MS tied the PC and phone UIs together into a "push-me pull-you" (Windows 8 everywhere) that can't succeed at either task. And so to escape MS will have to back out of their deal entirely, go back to designing phones and PC OSes separately, and given MS' ingrown bureaucratic insanity there that seems less than likely.
Grafting a few more limbs onto a failing Frankenstein will ... create a bigger failing Frankenstein.
But they were together already. This past time Nokia only developed Windows phones and Microsoft paid for the marketing of the Lumia. Nokia had Stephen Elop as CEO, for crying out loud. We already knew Nokia was a part of Microsoft. This is not a move, just a formality; the low price gives you another hint. If the partnership Microsoft-Nokia could have changed their positions in the mobile sector, it would have happened years ago.
> This is an acquisition that arguably puts Microsoft mobile capabilities above that of Google's, and closest to Apple's.
Man.. What have you been smoking?
> They're getting industry veterans with great design talent
Who consistently failed to exceed 3% of market share.
> They're acquiring proven channels to access global markets.
Very low-margin markets.
> Both Nokia and Microsoft have been floundering in the mobile space recently; neither have had any real explosive successes. Together they might make some really compelling offerings.
According to your logic, two bricks tied together float better than one.
Motorola and now Nokia, the last of the previous era big wigs have fallen. 13 years ago Lucent, Motorola, Ericsson, Sun, Nortel were huge. Now they are all gone. Even HP, Dell are no longer leading. That is a really short time span for a company to be on top of the world and disappear. Is this the expected life span of a tech company?
Motorola and now Nokia, the last of the previous era big wigs have fallen.
Actually, Nokia was slowly and steadily on a rebound in the markets where they were traditionally strong. E.g. market shares of Windows Phone in the five largest European economies has grown from 4.9% a year ago to 8.2% now [1]. That's almost half the marketshare of iOS (17.3%).
Most of those units were Nokia Lumias.
Sure, it's not where they were years ago percentage-wise, but the smartphone market has grown enormously since then, and WP is showing good growth (except in the US).
Specialized hardware was always kind of a stopgap. Even now you can see networking companies facing the double threat of virtualized networking in software. Software is eating the world as Andreessen famously stated.
As to the life span of tech companies I think it will only get shorter. One thing I find interesting is that it's difficult for humans (including myself) to really internalize the overall effects of compounding interest. I read a comment the other day in which the author was joking about how they can't wait until 2023 when they get to look back and feel how they do now looking back at 2003. It doesn't always seem that the speed at which things are happening is increasing dramatically even if that's the case. The progress between 2003 until now will be completely overwhelmed just a few years from today.
I found this statement interesting - "Microsoft will draw upon its overseas cash resources to fund the transaction." I've seen it mentioned quite a few times that tech companies end up with massive overseas cash reserves they can't repatriate for tax reasons. Anyone with better knowledge of finance/tax want to chime in with whether this makes the deal even more attractive for MS?
The corporate tax rate in the United States is 35%. The corporate tax rate in Ireland is 12.5%. (This is why multinationals like to incorporate their European subsidiaries in Ireland.)
If Microsoft moved money in the United States, it would pay the difference in taxes -- namely, 22.5%. But if Microsoft spent the money outside the United States, then it would not pay this difference.
Incidentally, Finland will be reducing its corporate tax rate next year, from 24.5% to 20%.
As I understand it, these international profits remain in the tax-haven-resident Irish company, and cannot be repatriated to the US parent without incurring an undesirable taxation event.
It's highly likely that Finland-based Nokia is a fiscally efficient purchase for Microsoft. Both Finland and Ireland are EU countries, are in the Eurozone, and have a customs union.
(It would be interesting to compare this to Google's purchase of Motorola Mobility, which was an American company.)
This is the ultimate indictment of Steve Ballmer's "I like our strategy, I like it a lot" statement. This is the final admission that their strategy of licensing a mobile OS to phone manufacturers, just as they licensed desktop Windows to PC makers, has completely failed. This must have been in the works for months, so now finally the other shoe has dropped and we know why he had to leave. There's no way he could save face over something like this.
Just to be clear, the strategy itself wasn't the problem, just look at Android, the problem was that technically their product was technically deficient. They failed to execute the strategy effectively. What I have always wondered is whether this was simply due to hardware limitations of the day, or whether the old Windows Mobile was deliberately held back technically to prevent it competing with Desktop Windows. If the former then Microsoft just suffered from a form of first mover's disadvantage, and a lack of foresight. If the latter then they richly deserve all the failure they've reaped. I'd love to know.
Well, it's possible that the model of selling an OS to phone manufacturers has been destroyed by Google giving an OS to manufacturers as a loss-leader.
Seems like Elop stayed true to his nickname - of a trojan horse. He never really worked for Nokia. He's been working for Microsoft the whole time, just to sell it for this low price.
How the hell are the shareholders okay with this? I'm shocked it sold for under $10 billion. Nokia's total valuation is about 15 billion, and you'd have to imagine they'd have to pay a 30 percent premium when buying it, so that's $20 billion for the whole. I assume the devices division was worth at least half of that. Didn't Nokia already sell the telecom part?
Presumably Nokia's management thought they were getting a good deal for the devices business, since its long-term value to Nokia seems to be approaching zero.
Now if you ask: was Windows Mobile all a plot to blow up Nokia? That's an interesting question. I can't confirm that.
That's what I thought when Elop went to Nokia and even in hindsight it seems to be the case. As a share holder, I definitely would ask questions. It seems hard to prove though; their market was falling anyway, but there are a lot of what ifs: like if they would've done Android, continued with their own OS but made it really open etc.
"Microsoft will draw upon its overseas cash resources to fund the transaction."
This is an important aspect of the deal - bringing money earned overseas into the US is often costly (taxes, etc.). As a result, US companies often end up with cash sitting overseas with nothing to spend it on, and are hesitant to take the hit that happens when they bring it to the US... so this is a great way for Microsoft to use that money in an effective way.
Key graff: "The average tax rate these companies currently pay to other countries on this income is just 6.9 percent, well below lower the 35 percent statutory U.S. corporate tax rate."
As I recall we (the US) have the highest corporate income taxes in the developed world. It would be a gross dereliction of management's duty to shareholders to repatriate it unless really needed.
Software is eating the world. For real now. And it is eating hardware. This is such a strong force that even old time franchises like Microsoft and Motorola can't do anything about it. And apparently "pure software" companies don't mind venturing into it. They know it's software, for the most part, and believe vertical integration is worth the trouble with the messy hardware parts.
How deep is the integration anyway? Did Google and Microsoft end up owning the manufacturing plants? Apple is known to outsource the manufacturing itself.
This news may sound exciting/disappointing to the developed countries, but it is certainly extremely disappointing for people in third-world countries, especially India.
It is not at all hyperbole to say 'Nokia played a key role in India's mobile penetration'. They sell affordable, reliable and rigid phones for rough use in rural places of India. And I think it's true for most other countries like Africa. On the other hand Microsoft mostly makes premium software and hardware. I don't know any affordable tool(w.r.t developing countries) from Microsoft. This may put Microsoft in a better position in terms of smartphone. But in other terms this may be a step towards 'diminishing power of poor people'.
On the other hand, the low end lumias are more usable than most of same priced android phones in Brazil, I know that here and parts of africa is the way the market is going. I hope they don't stop serving this market.
The low end android sets made by Micromax, Lava etc. are priced very affordably (Rs3000-5000/$50-80). And the market is still flooded with even cheaper feature phones. I don't see how the power of poor people is diminished.
Motorola is building featurephones until this day. Lots of them. Nokia is not going to abandon that market (India's) anytime soon while they are selling there. I would not worry about it too much.
I think this has been expected since the Nokia Windows Phone bet. I suspect that this is not unrelated to the Ballmer departure.
I'm not sure it does either company much good. If anything it looks to me like a panic move of two companies who while from te outside they seem huge and successful to many are actually seeing the writing on the wal and have no real plan for the future.
This won't make Microsoft competitive with Apple where it wants to be despite the hopes of Redmond.
The press release says Microsoft will acquire Nokia’s Devices & Services business and license Nokia’s patents and mapping services. So what happens to the rest of Nokia?
Nokia is now primarily a telecoms infrastructure company, like Alcatel-Lucent. They're pretty closely matched. Alcatel-Lucent had €14.4 billion of revenues in 2012, while Nokia Siemens Networks took in €13.1 billion of revenues.
There's also the mapping division, but that's just 10% of the new Nokia's revenues. I'm surprised Microsoft did not buy it, as Google and Apple both own their own maps. In fact, I wonder if the mapping division wasn't what scuttled the previous attempts to reach a deal.
"Its device business now gone, Nokia's plan is to focus on three core technologies: NSN (its network infrastructure) HERE (its maps and location-based services); and Advanced Technologies (a licensing and development arm)."[1]
It'll still exist. Most of the top executives are moving to Microsoft as part of the deal though.
I am curious if this deal required shareholder consent of any type. I'm sure the board had to approve. Still I don't know how I'd feel if I was holding onto a decent chunk of Nokia stock right now and I didn't get any say in selling out our core business.
And now Microsoft has a hardware division. I can easily see most hardware vendors being ousted by the trio of Google/MS/Apple - all of whom now either make or have been making their own hardware to go along with their software. And so the walled garden grows...
Speaking of handset makers that missed the revolution, I wonder who will pick up RIM as they circle the drain. Microsoft is probably the favorite right?
With the apparent growing trend on emerging markets of Windows Phones (the Lumia series produced by Nokia, and pushed by carriers on LATAM like Telcel/America Movil)
This seems like a great move from MS, they have bought more runway.
But come on, the move was telegraphed a couple of years ago.
What would this mean for all the Nokia feature phones ? The latest Asha series was very good and selling pretty well at least in India. How would this figure in MS strategy? Are they going to ditch it? That would be sad, because Nokia still makes phones that can withstand rough use.
On the other side would Nokia start manufacturing Laptop in future. I would really like Nokia design team to come up with a good Windows laptop!
The old fat couple in the room had a dance and #microsoft just ran out of things to say, so in order to avoid an awkward moment (high end sales are abysmal) he proposed. #nokia looked around, didn't want to die alone, and like any scared middle aged woman, said yes.
I hope Ballmer and Gates have a dedicated CEO in mind now that Ballmer's leaving... very few people will be able to lead a company this large, and it will be quite a tragedy if Microsoft's reputation declines and takes down Nokia with it.
[+] [-] kyro|12 years ago|reply
This is an acquisition that arguably puts Microsoft mobile capabilities above that of Google's, and closest to Apple's. They're getting industry veterans with great design talent. They're getting a Lumia product that has the best build quality of any non-Apple smart phone. They're acquiring proven channels to access global markets. Both Nokia and Microsoft have been floundering in the mobile space recently; neither have had any real explosive successes. Together they might make some really compelling offerings.
I'm not a fan of their mobile OS, but I am a huge fan of Nokia's latest smartphones, and if Nokia design's talent can figure out how to introduce a better UI, I'd seriously consider getting The Windows Phone as my next smartphone.
[+] [-] joe_the_user|12 years ago|reply
To have this loltastic sentence at the top of hn makes me wonder if MS or some PR has a bunch of shill accounts they roll out for occasions like this. Seriously? As the other reply said, they were already together. And losing. Badly. And hated, broadly.
And the reason the windows phone sucks so badly is that MS tied the PC and phone UIs together into a "push-me pull-you" (Windows 8 everywhere) that can't succeed at either task. And so to escape MS will have to back out of their deal entirely, go back to designing phones and PC OSes separately, and given MS' ingrown bureaucratic insanity there that seems less than likely.
Grafting a few more limbs onto a failing Frankenstein will ... create a bigger failing Frankenstein.
[+] [-] Shamanmuni|12 years ago|reply
Nothing will change as a result of this.
[+] [-] rbanffy|12 years ago|reply
Man.. What have you been smoking?
> They're getting industry veterans with great design talent
Who consistently failed to exceed 3% of market share.
> They're acquiring proven channels to access global markets.
Very low-margin markets.
> Both Nokia and Microsoft have been floundering in the mobile space recently; neither have had any real explosive successes. Together they might make some really compelling offerings.
According to your logic, two bricks tied together float better than one.
[+] [-] yalogin|12 years ago|reply
[+] [-] microtonal|12 years ago|reply
Actually, Nokia was slowly and steadily on a rebound in the markets where they were traditionally strong. E.g. market shares of Windows Phone in the five largest European economies has grown from 4.9% a year ago to 8.2% now [1]. That's almost half the marketshare of iOS (17.3%).
Most of those units were Nokia Lumias.
Sure, it's not where they were years ago percentage-wise, but the smartphone market has grown enormously since then, and WP is showing good growth (except in the US).
Source: http://www.nu.nl/tech/3565096/windows-phone-groeit-nieuwe-sm...
[+] [-] besquared|12 years ago|reply
As to the life span of tech companies I think it will only get shorter. One thing I find interesting is that it's difficult for humans (including myself) to really internalize the overall effects of compounding interest. I read a comment the other day in which the author was joking about how they can't wait until 2023 when they get to look back and feel how they do now looking back at 2003. It doesn't always seem that the speed at which things are happening is increasing dramatically even if that's the case. The progress between 2003 until now will be completely overwhelmed just a few years from today.
[+] [-] foobarbazqux|12 years ago|reply
[+] [-] mhartl|12 years ago|reply
[+] [-] anomaly_|12 years ago|reply
[+] [-] tanzam75|12 years ago|reply
If Microsoft moved money in the United States, it would pay the difference in taxes -- namely, 22.5%. But if Microsoft spent the money outside the United States, then it would not pay this difference.
Incidentally, Finland will be reducing its corporate tax rate next year, from 24.5% to 20%.
[+] [-] sjwright|12 years ago|reply
http://en.wikipedia.org/wiki/Double_Irish_arrangement
As I understand it, these international profits remain in the tax-haven-resident Irish company, and cannot be repatriated to the US parent without incurring an undesirable taxation event.
It's highly likely that Finland-based Nokia is a fiscally efficient purchase for Microsoft. Both Finland and Ireland are EU countries, are in the Eurozone, and have a customs union.
(It would be interesting to compare this to Google's purchase of Motorola Mobility, which was an American company.)
[+] [-] simonh|12 years ago|reply
Just to be clear, the strategy itself wasn't the problem, just look at Android, the problem was that technically their product was technically deficient. They failed to execute the strategy effectively. What I have always wondered is whether this was simply due to hardware limitations of the day, or whether the old Windows Mobile was deliberately held back technically to prevent it competing with Desktop Windows. If the former then Microsoft just suffered from a form of first mover's disadvantage, and a lack of foresight. If the latter then they richly deserve all the failure they've reaped. I'd love to know.
[+] [-] wtracy|12 years ago|reply
[+] [-] rbanffy|12 years ago|reply
This thing started before Elop left Microsoft. They have perfected executive outplacement as an offensive weapon.
[+] [-] devx|12 years ago|reply
How the hell are the shareholders okay with this? I'm shocked it sold for under $10 billion. Nokia's total valuation is about 15 billion, and you'd have to imagine they'd have to pay a 30 percent premium when buying it, so that's $20 billion for the whole. I assume the devices division was worth at least half of that. Didn't Nokia already sell the telecom part?
[+] [-] auctiontheory|12 years ago|reply
Now if you ask: was Windows Mobile all a plot to blow up Nokia? That's an interesting question. I can't confirm that.
[+] [-] tluyben2|12 years ago|reply
[+] [-] trailfox|12 years ago|reply
Wonder if it was intentional to run Nokia into the ground or just sheer incompetence?
[+] [-] pasiaj|12 years ago|reply
http://fi.wikipedia.org/wiki/Risto_Siilasmaa
[+] [-] timdellinger|12 years ago|reply
This is an important aspect of the deal - bringing money earned overseas into the US is often costly (taxes, etc.). As a result, US companies often end up with cash sitting overseas with nothing to spend it on, and are hesitant to take the hit that happens when they bring it to the US... so this is a great way for Microsoft to use that money in an effective way.
According to this article, Microsoft has $60 Billion sitting offshore in order to avoid US taxes: http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple...
[+] [-] hga|12 years ago|reply
As I recall we (the US) have the highest corporate income taxes in the developed world. It would be a gross dereliction of management's duty to shareholders to repatriate it unless really needed.
[+] [-] nickff|12 years ago|reply
[+] [-] peterjs|12 years ago|reply
How deep is the integration anyway? Did Google and Microsoft end up owning the manufacturing plants? Apple is known to outsource the manufacturing itself.
[+] [-] sravfeyn|12 years ago|reply
It is not at all hyperbole to say 'Nokia played a key role in India's mobile penetration'. They sell affordable, reliable and rigid phones for rough use in rural places of India. And I think it's true for most other countries like Africa. On the other hand Microsoft mostly makes premium software and hardware. I don't know any affordable tool(w.r.t developing countries) from Microsoft. This may put Microsoft in a better position in terms of smartphone. But in other terms this may be a step towards 'diminishing power of poor people'.
[+] [-] vshade|12 years ago|reply
[+] [-] avemuri|12 years ago|reply
[+] [-] gtirloni|12 years ago|reply
[+] [-] richardjordan|12 years ago|reply
I'm not sure it does either company much good. If anything it looks to me like a panic move of two companies who while from te outside they seem huge and successful to many are actually seeing the writing on the wal and have no real plan for the future.
This won't make Microsoft competitive with Apple where it wants to be despite the hopes of Redmond.
[+] [-] ximeng|12 years ago|reply
http://www.microsoft.com/en-us/news/download/press/2013/Stra... (page 21)
[+] [-] annnnd|12 years ago|reply
[+] [-] harrytuttle|12 years ago|reply
they bagged the guys who designed them as well.
[+] [-] trailfox|12 years ago|reply
[+] [-] berntb|12 years ago|reply
A black T-shirt today. :-(
[+] [-] cpeterso|12 years ago|reply
[+] [-] tanzam75|12 years ago|reply
Nokia keeps the other two divisions.
Nokia is now primarily a telecoms infrastructure company, like Alcatel-Lucent. They're pretty closely matched. Alcatel-Lucent had €14.4 billion of revenues in 2012, while Nokia Siemens Networks took in €13.1 billion of revenues.
There's also the mapping division, but that's just 10% of the new Nokia's revenues. I'm surprised Microsoft did not buy it, as Google and Apple both own their own maps. In fact, I wonder if the mapping division wasn't what scuttled the previous attempts to reach a deal.
[+] [-] gph|12 years ago|reply
It'll still exist. Most of the top executives are moving to Microsoft as part of the deal though.
I am curious if this deal required shareholder consent of any type. I'm sure the board had to approve. Still I don't know how I'd feel if I was holding onto a decent chunk of Nokia stock right now and I didn't get any say in selling out our core business.
[1]http://www.theverge.com/2013/9/2/4688530/microsoft-buys-noki...
[+] [-] IanChiles|12 years ago|reply
[+] [-] mindprince|12 years ago|reply
[+] [-] Steko|12 years ago|reply
[+] [-] tanzam75|12 years ago|reply
Note: RIM changed its name to Blackberry Ltd, with a stock ticker of BBRY.
[+] [-] cicloid|12 years ago|reply
This seems like a great move from MS, they have bought more runway.
But come on, the move was telegraphed a couple of years ago.
[+] [-] test001only|12 years ago|reply
[+] [-] ChuckMcM|12 years ago|reply
[+] [-] jcrei|12 years ago|reply
[+] [-] wfunction|12 years ago|reply
[+] [-] magickastle|12 years ago|reply