In what outgoing CEO Steve Ballmer called “a bold step into the future,” Microsoft is acquiring Nokia.
The $7.2 billion buy covers Nokia’s devices and services business, its stable of patents and the right to license and use Nokia’s mapping services, and as is typical with acquisitions, the process wasn’t without a few bumps along the way. In the end, though, both parties agreed to terms, and the deal was done.
Depending on whom you ask about the move, it’s:
- a situation where two wrongs don’t make a successful right,
- completely up in the air as to whether or not either party will accrue enough value from the deal to make it a worthwhile endeavor (given the highly competitive market space both companies are operating in) or
- a smart move to secure market share and awareness.
Of course, the reality is likely a combination of all three . . . a reality that might not comfort shareholders who saw an immediate dip in the value of their Microsoft stock.
Since the final steps of the purchase won’t take effect until 2014, it’s difficult to say at this point what the long-term financial and internal impacts of the move will be. But, this move does illuminate a few potential strategic directions for the tech giant. As I see it, Microsoft is:
- Angling for a more prominent position on the mobile landscape. The acceleration of the mobile industry—both in terms of devices and the software and apps used on them—shows no signs of slowing down . . . and that’s no surprise, considering how business and personal communication are evolving. If Microsoft wants to improve its presence in the mobile space, the company needs to get a stronger foothold. Nokia offers Microsoft promise in that regard, especially when it comes to redeeming Windows Phone missteps.
- Matching capabilities to the competition. Now that Microsoft will be a software and hardware operation, the company is potentially in a better position to compete with Apple’s iPhone and Google’s Android phones.
- Buying relationships along with technology. Microsoft doesn’t have the carrier relationships Nokia has, and these will come in handy the further Microsoft moves into the mobile space.
- Growth, period. Even behemoth corporations that have made billions for their founders need to adopt a shark approach: keep moving in a direction or two (or twenty) to stay alive. Innovation and new market spaces offer opportunities to succeed—or at the very least, to learn valuable lessons.
Again, the jury is still out on what this new relationship will yield for either Microsoft or Nokia, but one thing is for sure: The technology community is great at recognizing the “cons” in any deal, and less great at considering the “pros.” Microsoft’s willingness to take a leap despite the naysayers is part of what has made it a contender in the past—and that same gumption just might work this time, too.