Nokia and Microsoft - winners and losers

Nokia Lumia phone being demonstrated

It is a shock - but hardly a surprise.

Two years after Nokia's Stephen Elop told his company it was leaping off the "burning platform" of its Symbian operating system and switching to Windows Phone, the relationship with Microsoft is becoming a marriage.

With Nokia the only company making Windows Phone handsets its first priority, it was inevitable that Microsoft would want full control. After all, its whole strategy for playing catch-up with Google, Apple and Samsung in the new world of the mobile internet depends on finally getting some impetus behind Windows Phone.

So who wins and who loses from this deal? Nokia shareholders may be breathing a sigh of relief. Yes, they are only getting $7bn for a business that had a market capitalisation of $150bn in 2007. But the 40% rise in the share price this morning shows they feel this is a far better outcome than they might have expected after years of decline.

As for Microsoft, it will be a while before we know whether Steve Ballmer's last big gamble as CEO has paid off. He sees this deal as the final piece in the jigsaw, in his strategy to turn the software company into a devices and services business.

Steve Ballmer Microsoft CEO Steve Ballmer: His last gamble?

He told me this morning he was keeping on driving ahead while the board looks for a successor - and defended his record as CEO: "We've done a great job for shareholders," he said.

But even the presentation about the deal at the Helsinki press conference talked of beating Blackberry for third place in the mobile phone market - and Microsoft's investors may find that number three is not a very profitable place to be.

For Finland and for Europe as a whole, this must be seen as a sad day. It is hard to remember just how recently Nokia was Europe's technology superstar, with a 40% share of one of the world's fastest growing industries and a proud record of innovation.

Now, the day after another European telecoms giant Vodafone gave up on its American ambitions, the US is swallowing up Nokia. Europe set the pace in the early stages of the mobile phone revolution - now it is American and Asian companies which are shaping its future.

Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this

    Comment number 43.

    38.Mr Loser
    "The answer is ...[Apple] that doesn't pay its fair share of tax."

    Phone Story -> Apple -> "Fair share" of tax comments. Grow up. Tax law is there to be followed, who are you to decide what's fair, even in the unlikely case that you understand tax law?

  • rate this

    Comment number 42.

    Balmer's years are clearly not Microsoft's finest hour, mixing my metaphors madly I know. Best he goes quickly & a successor gets full control from a direction point of view. The "Where to?" question remains, however. Can Microsoft really learn to make high volume, fashion hardware like smartphones? Personally, I think their OS is the clear leader of the three but is that enough? Probably not.

  • rate this

    Comment number 41.

    Seems pretty good to me. It's all very lovely to think of a community writing some operating system to run on many phones but it's not a hobby. We need tightly coupled software and hardware to get reliability. I'm not a traditional Nokia or Microsoft man (though I make a living writing Microsoft sofware) but I'm looking forward to seeing the results.

  • rate this

    Comment number 40.

    I have a Sony Xperia-T Android phone and a Nokia Lumia 900 Windows 7 phone AND I prefer the Nokia. If you're not obsessed with Apps and you want an easy to use, free flowing, competent smart phone, don't rule out the Windows platform!

  • rate this

    Comment number 39.

    I just hope, although it will never happen, that Microsoft carry on the Nokia mapping program and not just replace it with Bing. I really believe Nokia maps are an excellent alternative to Google, Apple and Microsoft maps.

  • rate this

    Comment number 38.

    People sometimes ask me why I don't get an iPhone or iPad. After all, those products aren't that expensive and maybe you do get more respect from other passengers on the tube, even though the iPhone is not that innovative.

    The answer is quite simply that I don't like contributing to the profits of a company [Apple] that doesn't pay its fair share of tax.

  • rate this

    Comment number 37.

    @33 It's never ever been a requirement to buy music thru iTunes tho! I also meant OTA update for the S3, not rooting the device the geeky way. If your going to compare Apples to apples, then please do it properly.

    I apologise for being bombastic, but it's just stupid the rubbish that droid fanboys push out, with little's about 2 steps away from 'But macs don't have right click'

  • rate this

    Comment number 36.

    I don't believe Microsoft will can Asha feature phone , that would be foolhardy as it's already holding it's own in its own segment. I believe they will invest strongly to grow market share in smart phone sector, and if they are "smart" thinking, they will utilize Finland infrastructure to provide that function, not destroy it.

  • rate this

    Comment number 35.

    @23 - both of your points are completely wrong, and I say that as someone who has an android phone despite owning an iPad and an iMac. A lot of people now choose Android because the S3 / S4 / Xperia Z have bigger screens, which are better for games and browsing. Many others base the decision solely on cost. There aren't many people who would turn down an iPhone and have a £100 handset instead

  • rate this

    Comment number 34.

    Sounds like the Asha feature phone range is about to be canned! Shame really they are a good alternative to a smartphone if you don't want your life taken over by the os 'eco system'. Maybe they should look at a cut down MS phone OS for the Asha range? There really is a market for the good £50 - £80 feature phone globally.

  • rate this

    Comment number 33.

    @ 27. Alex Robinson OK I didn't know they had removed those locks on iTunes. However I have upgraded many s3's to Jellybean and seen it on S2.
    With iPhone you can buy one hand set not the many on other platforms that was my point. I guess you are an iPhone user by your pompous and bombastic reply. See how I didn't do that by admitting you could be right, because I have nothing to defend.

  • rate this

    Comment number 32.

    Now that Microsoft has got its teeth into Nokia, the next bite will be tough consolidation with Central Control moving to USA. The fancy buildings in Finland will be history.

    Steve Ballmer leaves Microsoft in new hands, who will clean-up the mess, staff redundancies, relocation etc ...
    Asset Stripping of IP & Patents recover the investment.
    Once the investment is recovered, End of Story.

  • rate this

    Comment number 31.

    Nokia and Microsoft both lost the plot a few years ago. Joining them together is only good for Nokia shareholders. This deal is irrelevant to the market.

  • rate this

    Comment number 30.

    @10 "They should be able to blow everyone out of the water in about 3 years"


    Yes, no doubt they'll be able to blow todays competition out of the water in 3 years time. But the competition in 3 years time will be three years ahead of them. And that's why a company worth 150 billion in 2007 gets sold for 7 billion in 2013.

  • rate this

    Comment number 29.

    I for one would be very happy to switch from my Galaxy S3 to a new Nokia Windows phone as long as the competencies were the same. At least then I would be using a compatible system on both my phone and my laptop. I realise I could do that anyway with Apple products but like a lot of other people I am a born and bred windows man.

  • rate this

    Comment number 28.

    @23 almost all your points are wrong. You can add your own music to iTunes from any source - don't have to buy music from iTunes. Music you do buy from iTunes now is DRM free so you can put it on any platform. You can't transfer apps across platforms (but same applies to droid and windows phone). Finally phones can be updated although not some older models - just like like droid!

  • rate this

    Comment number 27.

    @23 Utter don't have to buy music on iTunes to use on an iPhone. Buying any smartphone locks you into their ecosystem. If you have a droid, you'd lose the cash you've spent if you moved to iOS/WPho/BB.
    Apple keep their phones updated with the latest software far more than Droid! Show me an S3 running Jellybean! Whereas i'll show you a 4 running ios7!
    Research before posting please!

  • rate this

    Comment number 26.

    As a supplier to Nokia it was very clear Nokia would require massive investment to regain some of the market share lost over the last few years. Undoubtedly, their commitment to the meego operating system was ill founded, and cost the company dearly in terms of it's direction. I only hope Microsoft will keep and nurture Nokia's core competency, namely it's development team

  • rate this

    Comment number 25.

    At one point we all said "why would anyone by any smartphone that isn't an iPhone?! There's the app store and Android is miles behind.." And yet now Samsung has stolen the show and people rave about their products....
    Times can change and "Nokia" handsets could have a revival... Would take some serious effort though, in my opinion, considering how long and deep Nokia have been dead and burried!

  • rate this

    Comment number 24.

    "We've done a great job for shareholders,"

    Yes, but what about the customers, Steve? That's your problem right there: you forgot about them.


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