Editorial

What Microsoft's deal to acquire Nokia will (and could) mean to everyone

If people thought that the time period before Microsoft selects a replacement for retiring CEO Steve Ballmer was going to be a quiet one, think again. Microsoft's deal to purchase Nokia's hardware and services business, along with a long term patent license contract, woke everyone up who was already asleep in Europe and the U.S. just a few hours ago.

Nokia and Microsoft are scheduled to hold separate press conferences calls today to discuss the deal with the media. Nokia will hold its event at 4 am Eastern Time and Microsoft will hold its own at 8:45 am Eastern time. Before both events happen, Microsoft issued what it called a "strategic rationale" document that outlines its own reasons for buying parts of Nokia for $7.17 billion.

One of the sections in the document says flat out that Microsoft "cannot risk having Google or Apple foreclose app innovation, integration, distribution or economics". In other words, the company knows that the iOS and Android platforms are major threats to Microsoft and that its purchase of Nokia's smartphone hardware is, in their opinion, the best way to combat that threat.

Microsoft also said in that same document they want to work with Nokia on its HERE mapping platform, and indicated that they wanted to see "an effective alternative to Google". At the same time, Microsoft says it will "continue to support iPhone and Android/Galaxy phones with our services" such as the recently launched Office 365 support for iPhones and Android devices.

There will likely be other consequences that will be felt as a part of this deal (assuming it is approved and goes through by the first quarter of 2014). Here are just some of the effects that we think will take place.

Stephen Elop is now the number one candidate for Microsoft's CEO gig

Many people had already speculated that Elop was going to be one of Microsoft's top picks as a successor to Ballmer. Now that Elop is officially returning to Microsoft to head up its Devices division, the likelihood that he will also be Microsoft's new overall leader just went up astronomically. We would now be very surprised if the company's board of directors picked anyone other than Elop to be its new CEO.

Samsung, HTC and Huawei are likely out of the Windows Phone business

Microsoft has three other hardware partners currently for Windows Phone 8, but none of them have had the sales success for their devices compared to Nokia's Lumia lineup. Now that Microsoft is taking over the Lumia brand completely, Samsung, HTC and Huawei may feel that there is little benefit in making Windows Phone units of their own. We might see a few devices already in development from those companies released this year or in early 2014, but we think that the rest of 2014 will see Microsoft as the sole maker of Windows Phone hardware products, despite what the company's head of Operating Systems Terry Myerson might say otherwise.

The merging of Windows Phone with Windows on the PC can truly begin

Windows Phone, Windows RT and Windows 8 all share the same Modern UI for touchscreens, but technically those operating systems are separate with their own rules. The fact that Microsoft is now going to make smartphones in addition to its Surface tablets could be the first big step in a plan that will eventually see all of Microsoft hardware products running on just one Windows OS, with apps that can be used on a smartphone, tablet, notebook, desktop or even an Xbox game console with no additional coding required.

Apple and Google had better get ready for a major battle in the devices and operating systems space

Many people have accused Apple of coasting on its previous products for the past year or so, and Google's own attempts to launch hardware products, either with their own brand or via their Motorola subsidiary, have also failed to gain much traction. Microsoft is now firmly in place as a company that will make its own tablet and smartphone products, and that means everyone who buys such devices will have a lot more choices to buy. Apple and Google should be prepared for what could be a brutal battle for the hearts and minds of consumers and businesses.

Images via Microsoft, Apple and Nokia

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Microsoft is definitely making their intentions clear by buying out Nokia, it will be interesting to see how they do with it.

Loser + Loser = Moronic Loosers.

A smartphone failed company and trying to play catch up (MS) throw up money to buy soon to be getting innovatively challenged and soon to be bankrupt company (Nokia) and both expecting to be turn out to be a winner. LOL.

It means death to Windows Phone. I have no faith that MS can manage this. OEM's will pull out of the WP market leaving it to the new MS/NOKIA hardware business.

derekaw said,
It means death to Windows Phone. I have no faith that MS can manage this. OEM's will pull out of the WP market leaving it to the new MS/NOKIA hardware business.

OMG. Do you really think they'll lose HTC, Huawei and ZTE? Jeez. How will they cope? This is surely the end of the world.

I wouldn't mind if Microsoft was the sole hardware vender for WPs. Maybe they could be like Apple and wrestle control of the update system away from carriers.

Think this could work out well.

It's clear Microsoft, true to their "we're going all-in" statements, are going for a single OS running on controlled and well designed hardware. Fact is they have the PC market sown up. They're a big player in servers. They have one of the top game consoles. They have their own tablets. They now have their own phones. Running it all on one operating system base with compatibility of applications and services has high potential. I don't think Apple or Google have the ability to touch this.

Trollercoaster said,
I don't think Apple or Google have the ability to touch this.

Apple potentially could. But Google write crummy software and would have to rely on Motorola for hardware (clownware). Expect Samsung to ditch Android and go with its own OS (Tizen) before the end of the year. No reason to stay with Google now - too expensive.

I can tell you this: It means tons of gutted "analysts" who cried, and cried, and cried that Nokia should switch to that "awesome" OS, Android, since it is such a saving grace.

Dot Matrix said,
I can tell you this: It means tons of gutted "analysts" who cried, and cried, and cried that Nokia should switch to that "awesome" OS, Android, since it is such a saving grace.

No matter if they were wrong I don't think they feel gutted when seeing Nokia sell it's devices unit for cheap.

Dot Matrix said,
I can tell you this: It means tons of gutted "analysts" who cried, and cried, and cried that Nokia should switch to that "awesome" OS, Android, since it is such a saving grace.

This has to be the post of the day. Good one Dot Matrix.

What this means is expect the main focus to be on touch screen devices - the "post-PC era". Microsoft R&D will probably be mainly focused on Metro apps.

Edited by 68k, Sep 3 2013, 11:00am :

I only see this as good news for Microsoft and Nokia. I like the simplicity of one brand one set of devices similar to Apple. Now this doesn't mean Samsung and HTC have to exit, just look at Google/Motorola. Samsung is still the Android kind even though Motorola is the in house brand.

neonspark said,
he he, what this means is no lumia will ever ship android. evah which is awesome.

Given the cost of paying for Android patent "lapses" - which will double now Microsoft controls Nokia's patent portfolio - it's doubtful if anyone will ever ship another Android phone again.

Julius Caro said,
What happens to Nokia's lower end feature phones?

Apparently Microsoft wont be able to use the lumia brand either?

Asha? That comes as part of the deal as well. MS can't use the "Nokia" name on future devices, but it doesn't say anything about not being able to use "Lumia".

From the Nokia press release:
Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current Mobile Phones products. Nokia will continue to own and maintain the Nokia brand. Under the terms of the transaction, Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems.

GP007 said,

Asha? That comes as part of the deal as well. MS can't use the "Nokia" name on future devices, but it doesn't say anything about not being able to use "Lumia".

They can also use the Nokia name on future devices, from the PDF released by Microsoft:

"Microsoft is acquiring over 8500 design patents, ownership of the Lumia & Asha brands, and a ten year license to use the Nokia brand on feature phones.

However that last sentence does seem to imply this will only be valid for Asha devices and not Lumia devices.

sjaak327 said,

They can also use the Nokia name on future devices, from the PDF released by Microsoft:

"Microsoft is acquiring over 8500 design patents, ownership of the Lumia & Asha brands, and a ten year license to use the Nokia brand on feature phones.

However that last sentence does seem to imply this will only be valid for Asha devices and not Lumia devices.

Yeah, well, Nokia still has a strong name in feature phones so still having that brand on feature phones is fine. The thing is the keep the Lumia brand going now that it's picked up traction.

Gutted!

Never again will I have the joy of owning a Nokia phone - on the up side, Jolla have just been given a massive boost - Sailfish time bi*ches!

20legend said,
Gutted!

Never again will I have the joy of owning a Nokia phone - on the up side, Jolla have just been given a massive boost - Sailfish time bi*ches!

Sailfish? Sailpish. Jolla were part of the management team that destroyed Nokia in the first place. They couldn't manage a fart at a baked bean eating contest.

In my view, Microsoft leases some of the patents and earns 5billion dollars in 10years and Getting all the money, which they paid for this.

Albert said,
another typical delusion of grandeur neowin article. another opportunity for some good laughs. lmfao.

Another great response. Always good for a laugh. LMAO

Clamdigger63 said,

Another great response. Always good for a laugh. LMAO

why thank you. couldn't do it without neowin's 'unprofessional journalism', though. LMFAO.

as long as the nokia team is left to keep pumping out high quality lumia products then its all good. MS might go to high end like the RT and price itself out of even the high end market

derekaw said,
It means a big mistake. Two turkeys don't make an eagle. NOKIA is dead now.

Yes. They didn't make eagle. They made an Angel "Microsoft"

derekaw said,
It means a big mistake. Two turkeys don't make an eagle. NOKIA is dead now.

and since we're stealing silly quotes made years ago,

two bike markers one day decided to fly.

I hope they get more brutal competition.I think with unity , Ubuntu edge and the global unified device/O.S, the competition is more fierce

medhunter said,
I hope they get more brutal competition.I think with unity , Ubuntu edge and the global unified device/O.S, the competition is more fierce

Ubuntu edge didn't even raise the money....

medhunter said,
yep.But it proved that there is interest in it and it is not a total dumb thing

It proved there was little interest in it.

Apple and Google had better get ready for a major battle in the devices and operating systems space

Wahahahaha! Good One John!

Kalint said,
Apple and Google had better get ready for a major battle in the devices and operating systems space

Wahahahaha! Good One John!

Wahahahaha Good One Kalint

Right, that's totally absurd because nothing short of Jobs returning back from the dead and Google throwing everything out and rewriting Android code from scratch will save them now.

Major_Plonquer said,
Google didn't write Android. They bought it. Google can't write software. They're not a software company. They're an advertising sales company.

And you can't write good comments!

HTC and Samsung don't have to exit, if anything by MS also getting all the Nokia patents they could turn around and make them, I bet they are, part of the WP licensing deal to allow them to use in their devices. Something Nokia wouldn't do and would want to get paid for. This would instantly help cut down the mobile litigation nightmare that is still going on today.

I mean Google overpaid for Motorola just to get some mobile patents to help Android out, and other Android phone makers can use those without fear, at least I'd hope so.

Windows Phone and Windows RT was always going to merge, even if MS never bought Nokia, I saw that as the end goal from the moment they switched Windows Phone 8 over to NT from it's CE+Silverlight model.

GP007 said,
HTC and Samsung don't have to exit, if anything by MS also getting all the Nokia patents they could turn around and make them, I bet they are, part of the WP licensing deal to allow them to use in their devices. Something Nokia wouldn't do and would want to get paid for. This would instantly help cut down the mobile litigation nightmare that is still going on today.

I mean Google overpaid for Motorola just to get some mobile patents to help Android out, and other Android phone makers can use those without fear, at least I'd hope so.

Only problem with this idea is that MS are only getting licenses for the patents so they can't just give out rights for everything. Plus there is no reason for MS to allow anyone to use their patents for any products that don't use some form of Windows. Anyone producing Windows devices already gets the rights to use MS's patents so nothing is going to change really.

mog0 said,
Only problem with this idea is that MS are only getting licenses for the patents so they can't just give out rights for everything. Plus there is no reason for MS to allow anyone to use their patents for any products that don't use some form of Windows. Anyone producing Windows devices already gets the rights to use MS's patents so nothing is going to change really.

I was under the impression that the deal meant MS actually gets a number of Nokia patents as their own while still licensing the use of the HERE maps platform.

GP007 said,

I was under the impression that the deal meant MS actually gets a number of Nokia patents as their own while still licensing the use of the HERE maps platform.

The article announcing the deal (linked to from this article) says:

"Nokia has announced that Microsoft will acquire its Devices & Services business. Microsoft will also license Nokia's patents and license and use Nokia's mapping services."

I read this as meaning that MS is only buying licenses for the patents, not the licenses themselves. Of course the article could be inaccurate / misleading so feel free to correct me if I am misunderstanding.

Norman68 said,

Google didn't overpay for Motorola. /

What a joke. So far Google has been unable to enforce a single Motorola patent against Apple or Microsoft - not one - while both of those companies have succeeded in case after case after case against Google. Microsoft collects royalties from more than 20 Android manufacturers - who will now have to pay more to cover the Nokia patents.

Anything Google paid over a buck seventy five for Motorola was wasted. The dumbest deal in the history of history.

Buy a Surface, get a FREE Lumia phone. Limit 1000 per family.

Get yours now, limited time only, limited stock, never to be repeated, selling fast!

Attempt at humour aside, on the subject of Surfaces.... the thought I just had was... now that Microsoft own (or will do in Q1 next year anyhow) Nokia's device business, will they release two tablets Surface 2 vs Nokia Tablet, or will they just rebrand the rumoured Nokia tablet as the surface. Or perhaps they'll just drop the Surface brand altogether nd go with Nokia's brand?

dvb2000 said,
Buy a Surface, get a FREE Lumia phone. Limit 1000 per family.

Get yours now, limited time only, limited stock, never to be repeated, selling fast!

Ha..Ha. * Except in Nebraska

Zoli Csáki said,
Doubt they can use the Nokia brand on a tablet, they're only allowed to use the Nokia brand on feature phones.

Indeed, and I don't see Microsoft wanting to sell two tablets that compete with each other. So which range will they keep?

Me neither. My guess is that we won't see a Nokia tablet at all, and the last device with this brand will be that much rumored 'Bandit' phablet. It was a silly move that Microsoft ditched the Nokia name, they should have payed a couple more $millions and use it on future smartphones too.

I'm curious though, how many smartphones will Microsoft release in a year. If they want to replace the feature phones with smartphones, than I guess they need at least 8-9 to cover all the features, price ranges in all regions. Now with the staff from Nokia, and the money from Microsoft this can be achieved, and then Windows Phone will be a serious contender, heck even 'the next Android', but again.. it's Microsoft who will pull the strings from here and with their laziness and regional specific services it could go directly the opposite way, down to the pit.

Dushmany said,
My hopes have just been crushed

what hopes were these? that nokia would run to google in an HTC-like replay? HTC is on massive decline so nokia yet again does the right thing. Samsung = Android. you can't compete with Samsung by using the OS they own. And let's face it, everybody who is an android OEM is nothing but feeding off Sammy's crums.