Microsoft acquires Nokia for $7.9 billion. Will the deal work?

Microsoft has laid an all-or-nothing bet by acquiring the fallen mobile empire of Nokia. In a deal worth $7.9 billion, Microsoft will buy Nokia’s devices and services business, license its patents and use its mapping service. The takeover will be an end of the era for the Finnish company, who were one of the pioneers in the mobile phone technology.

However, over the last half of the decade, new giants like Samsung and Apple have taken center stage in an industry that still finds itself in continuous flux. And the heavy competition has meant Nokia’s market share in many emerging markets have fallen considerably.

Nokia over the years has become a true example of how high handedness and leadership mistakes can break a company. Nokia failed to keep pace with newer technologies, unable to build a marketplace that would lure users and application developers. It was very late in joining the smartphone bandwagon, thus enabling its competitors to take over its market share.

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Its biggest mistake was in failing to understand the scope of touchscreen phones. Although the Nokia researchers and developers were the first to come up with touch phone technology, they abandoned  the technology at the wrong moment assuming it’s not as user-friendly, thus putting the project on the back burner. Later when the touchscreen market grew, Nokia was left to do all the catching up.  But alike touchscreens, it was not as if Nokia did not try. They have tried multiple times and failed every time.

So can Microsoft save Nokia?

Many believe that the deal is good for both companies, but if history is any indication, it’s clear that even when the strongest companies acquire weaker ones, it doesn’t spell instantaneous success.In the past Google’s takeover of Motorola has been a failure.

As for Nokia and Microsoft – both companies struggling for survival- they have now entered into holy matrimony, a situation many have described as two people drowning who are hanging on to each other for dear life. After this takeover, the only question that remains to be answered is, can Microsoft design phones and an OS to compete with Apple and Google or is this the beginning of another Blackberry and Motorola like tragedy?

About Omkar Shetty 14 Articles

An engineering graduate from Birla Institute of Technology and Science – TMI, Pune, Maharashtra. A marine engineer and sports writer, with particular interest in cricket and ever-increasing passion for the game of football. Loves to analyze and dig out interesting facts related to sports. You can read his blog at : Get Sportified .