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    Microsoft's Nokia's Phone: Acquisition of Business

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    AsmitPatrapada
    The document summarizes Microsoft's acquisition of Nokia's phone business in 3 sentences: Microsoft paid $5 billion for Nokia's devices unit and $2.18 billion to license Nokia's patents, marking the failure of both companies to gain significant market share in smartphones against Apple and Android; the deal is an attempt by Microsoft to gain ground in its ecosystem by taking control of Nokia which manufactured most Windows phones, but chances of success are still slim; it allows Nokia to exit the phone business and focus on its networking equipment, but Finland will feel the economic impact.

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    Microsoft's Nokia's Phone: Acquisition of Business

    Uploaded by

    AsmitPatrapada
    18 views15 pages
    The document summarizes Microsoft's acquisition of Nokia's phone business in 3 sentences: Microsoft paid $5 billion for Nokia's devices unit and $2.18 billion to license Nokia's patents, marking the failure of both companies to gain significant market share in smartphones against Apple and Android; the deal is an attempt by Microsoft to gain ground in its ecosystem by taking control of Nokia which manufactured most Windows phones, but chances of success are still slim; it allows Nokia to exit the phone business and focus on its networking equipment, but Finland will feel the economic impact.

    Original Description:

    Rouvinennokia Ms Deal6 Sep 2013 130920021818 Phpapp01

    Original Title

    Rouvinennokia Ms Deal6 Sep 2013 130920021818 Phpapp01

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    The document summarizes Microsoft's acquisition of Nokia's phone business in 3 sentences: Microsoft paid $5 billion for Nokia's devices unit and $2.18 billion to license Nokia's patents, marking the failure of both companies to gain significant market share in smartphones against Apple and Android; the deal is an attempt by Microsoft to gain ground in its ecosystem by taking control of Nokia which manufactured most Windows phones, but chances of success are still slim; it allows Nokia to exit the phone business and focus on its networking equipment, but Finland will feel the economic impact.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    18 views15 pages

    Microsoft's Nokia's Phone: Acquisition of Business

    Uploaded by

    AsmitPatrapada
    The document summarizes Microsoft's acquisition of Nokia's phone business in 3 sentences: Microsoft paid $5 billion for Nokia's devices unit and $2.18 billion to license Nokia's patents, marking the failure of both companies to gain significant market share in smartphones against Apple and Android; the deal is an attempt by Microsoft to gain ground in its ecosystem by taking control of Nokia which manufactured most Windows phones, but chances of success are still slim; it allows Nokia to exit the phone business and focus on its networking equipment, but Finland will feel the economic impact.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 15

    Microsofts

    Acquisition of
    Nokias Phone
    Business
    marks the failure of
    both companies
    International Herald Tribune, 4 Sep 2013, p. 16

    Sep 2010:
    Elop, Nokias CEO
    Jan 2007:
    Apple iPhone

    Feb 2011:
    Windows
    Phone in
    of
    MeeGo out

    1998:
    Gates in
    alks w. Nokia

    2006:
    Nokia & Siemens
    merge network 2008/9:
    businesses
    Google
    Android

    Feb 2011:
    Platform
    burns

    3 Sep
    2013:
    Jul 2013:
    MSs acq.
    Nokia buys
    of
    Siemens out
    NSN for $2.21bn Nokia
    devices

    Jan 2013:
    MS-Nokia
    talks

    Aug 2013:
    Ballmers
    step down
    announced

    Preceding rocky rides


    of

    Microsoft & Nokia

    Market Shares of Mobile Smartphone Operating Systems


    Windows
    Other

    100%

    RIM

    90%

    Blackberry

    80%

    iOS

    70%

    Apple
    60%
    50%

    Android
    Google

    40%
    30%
    20%

    Symbian

    10%
    0%
    39813

    Nokia
    40178

    40543

    40908

    Source: Gartner.

    41274

    41456

    PC, Smartphone and Tablet Operating Systems Together


    100%
    90%
    80%
    70%
    60%
    50%
    40%

    Android
    Other
    RIM

    Apple

    30%
    20%
    10%

    MS Windows

    0%

    Sources: Business Insider, Gartner, IDC, Strategic Analytics, company flings

    Operating Profit Margins, %


    50

    Microsoft

    40

    Google
    30

    Apple

    20

    Samsung
    10

    0
    41639

    41456

    -10
    Source: Company releases.

    41274

    Noki
    a
    40908

    40543

    40178

    39813

    Market Value, $bn

    690
    590

    Apple

    490
    390

    Microsoft

    290

    Google

    190

    Samsung

    90
    -10
    41639

    41519

    41274

    40908

    40543

    40178

    Noki
    a
    39813

    Source: Company releases. End of the year except for 2013, which refers to Sep 2nd

    39447

    MSNokia

    Microsoft pays

    $5bn

    for Nokias devices

    unit &

    $2.18bn to license IPRs


    Nokia retains
    Rougly what Microsoft paid for Skype in
    2011 or
    Current
    Nokia
    split
    to
    half

    New
    Nokia for Navteq in 2007; under 10% of
    Nokia:
    MSs cash

    Employment
    32,000

    Nokia, Global
    Other:
    37,295

    5,295

    NSN:
    50,476

    NSN:
    50,476

    Jun 2013

    Q1/2013

    Other:
    5,100

    Nokia, Finland

    NSN:
    5,800

    NSN:
    5,800

    Microsoft, Global
    131,139
    99,139

    Jun 2013

    4,70
    0

    Q1/2013

    Microsoft, Finland

    400

    5,000
    300

    Stock market reaction


    40
    30

    +41% Nokia

    Nokia gets out of its cash crisis &


    is left with a solid network eq.
    business

    20
    10
    0
    -10
    Aug 30 = 100

    -6.5% Microsoft

    Microsoft positions itself to burn


    cash in an effort to make
    its ecosystem fly

    Sep 5 Close

    Daily close prices at Nasdaq (MS) & NYSE

    Why?
    Nokia

    Microsoft

    Cash crisis

    Mimicing Apple & Google

    Windows ecosystem
    not gaining ground
    No improvement in
    the short or medium
    term

    No ability to jump
    the MS ship?

    Windows ecosystem not


    gaining ground
    HW-SW integration
    Avoid double margins
    in Windows phones
    All-in cash burning

    Nokia made >80% of


    Windows phones &
    was at a fre sale price

    Viable next steps


    Microsoft might
    Sell Nokia factories (18,000 employees)
    Leverage licensed Nokia brand in
    urging feature phone users to Windows
    Discontinue headquarter functions &
    feature phone development in Finland
    Retain 80-90% of its Finnish employment
    Replace Ballmer with Elop

    Nokia might
    Concentrate primarily to network eq. & services
    License/sell IPRs (w. reduced focus on related R&D)
    Narrower focus in location-based services
    Be engaged in further M&A action

    Ultimate outcomes?
    Microsoft: Renewed hope for the ecosystem
    but slim chances of success
    Nokia: Nicely pooring business after a rocky ride
    Industry: None?
    Finland: Mentally a shock, but economically
    neutral?

    Conspiracy theory: After exiting Windows & flling


    its coffers, Nokia re-enters phohe business

    Thank
    You!
    f.linkedin.com/in/petrirouvine
    n/
    Petri.Rouvinen@ETLA.f
    +358503673474

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