Here's a Good Reason Why Microsoft is Buying Nokia

News
By Kevin Parrish
published

Nokia Smart Phone will be the launching pad for Microsoft services in many markets.

Sure, acquiring Nokia's Devices and Services division means Microsoft will have direct access to the company's smartphone and mobile phone businesses, the design team, manufacturing and assembly facilities around the world, and teams devoted to operations, sales, marketing and support. Microsoft will even have access to a bucket of patents, and Nokia's snazzy mapping service.

But what Microsoft will also gain is a wider global audience for its own services. Nokia's "Conversations" blog was updated last week to welcome Nokia's broader Mobile Phone customer base to the Microsoft family. These devices include next-generation feature phones like the new aluminum Nokia 515 and the Nokia Asha 501.

"There are 1.3 billion people using a Nokia phone today," said Microsoft Vice President of the Operating Systems Group Terry Myerson. "In some markets, the word 'Nokia' is synonymous with 'phone' – and we aspire to live up to that brand as we welcome customers of these products into our Microsoft family."

So here's food for thought. 1.3 billion is an impressively large number even it includes legacy hardware. But it's also an audience Microsoft will eventually address with its own services and perhaps one day a Windows Phone device. For many, a new $20 Nokia feature phone would essentially be their first personal computer, and with Microsoft's name stamped all over it.

Microsoft said last month that Nokia's Mobile Phones business unit had sales of 53.7 million units in the second quarter of 2013. Microsoft will acquire the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products, although Nokia will continue to own and manage the Nokia brand. This will allow Microsoft to extend its service offerings to a far wider group around the world while allowing Nokia's mobile phones to serve as an on-ramp to Windows Phone.

"With Nokia's Mobile Phones starting at $20, more people will be introduced to Microsoft services earlier in their lives than ever before. In some geographies, Windows Phones are not available," Myerson said. "Again, Nokia's Mobile Phones will introduce more people to Microsoft services in more places than ever before."

Nokia's Smart Devices business unit, which includes the Lumia brand and products, saw sales reaching 7.4 million units in the second quarter of 2013.

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Kevin Parrish
22 Comments Comment from the forums
  • Dorian Black
    Not sure if it's a good reason or a good sign of desperation.
    Reply
  • BeastLeeX
    I hope they are still indestructible.
    Reply
  • virtualban
    Divided they would fail in the current landscape of mobiles.
    Together they will fail still, but maybe they can hold on a little longer.
    Reply
  • tului
    So basically Microsoft realizes people with money are already taken and will sell to poor people. I mean if it makes them money, I guess it works. Gotta sell a lot of $20 phones in the 3rd world to make any though.
    Reply
  • abbadon_34
    Great so Microsoft is not "pivoting" to the third world? Disgraceful, though I supposed it's the only place where there are still respected, after Europes obscession with Internet Explorer and Clinton's monopoly prosecution.
    Reply
  • back_by_demand
    abbadon_34, Europe's uptake of Windows Phone is double that of the USA, I think the level of respect that they command is higher than you give credit for
    Reply
  • Narcissistic_Martyr
    11604438 said:
    So basically Microsoft realizes people with money are already taken and will sell to poor people. I mean if it makes them money, I guess it works. Gotta sell a lot of $20 phones in the 3rd world to make any though.

    If you make $5 on 1 billion sales you not only make $5 billion but when they move up in the world they'll likely stick with your products. Proctor&Gamble does the same thing with their charitable work and product donation in third world countries which is helping them build a relationship with future customers.
    Reply
  • cats_Paw
    Good moment to throw away my nokia, knowing how microsoft operates.
    Reply
  • belardo
    Meh... okay, 3rd world kind of understand it... like converting AppleII owners to Macintosh or C=64 to Amiga... but it may NOT work.

    There is another problem, which China shows. In those 3rd world countries - to get a SmartPhone is lucky enough... but it doesn't feed the eco-system of a mobile platform (App store)... A typical iPhone user will spend $100 on apps and $1000+ on music. In China, nobody buys anything... or very little.

    So the MS App store has little to buy with no customers to buy it. Makes sense now! :)

    I thought the real reason for MS to buy our Nokia Mobile was to keep the ONLY WindowsPhone brand alive. Samsung and HTC were pretty much out (They didn't get paid to make WP phones like Nokia did) and as of now, they are out of the WP business. Just as the only one making an RT tablet is now Microsoft and they dropped the RT name off the product. (Bwahahahaha) Really, it would have made FAR more sense to have kept the Metro Name of the GUI since its NOT Windows anything.

    Reply
  • Avus
    MS buy Nokia because Nokia is not the cell phone leader anymore (for a long while) and they are CHEAP to buy... A market loser buy another market loser.
    Reply