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