Is it then an end for Nokia and time to say goodbye? As goes by the news, Microsoft has bought Nokia’s besieged mobile phone business in an effort to “accelerate” its challenge to the dominance of Apple and Google.
Shares in Microsoft slid as much as 6%, lopping more than $15 billion off the company’s market value as investors protested the acquisition of an under performing and marginalized corporation that lost more than $4 billion in 2012.
Nokia’s chairman, Risto Silasmaa has admitted that the Finnish company’s valuable exit from the mobile phone business it had pioneered was an ‘emotional’ decision. But none the less, it made a fiscal and strategic sense. It is said that resources needed for promoting the lumia smart phones was lacking and they used the operating system of Microsoft’s windows phone. Thus in an industry which required significant financial momentum, Nokia alone couldn’t provide the resources to fund the required acceleration.
For a country with small economy, the timing of Nokia’s vertiginous rise was ideal. In the 1980s the company started selling the first mass market mobile phones virtually introducing the world to this concept. By the end of the century Nokia was the world’s number one mobile phone manufacturers. However its fortune began to fall soon after Apple introduced iPhone in the year 2007. Though many still believed that Nokia would make a comeback, its shares slumped by more than 80%.
Elop, who presided over Nokia’s market share collapse, is being discussed as a potential replacement because he remains respected and is considered one of the few who can fully grasp Microsoft’s sprawling empire. However the Finnish media made a analogous comparison and labeled him as a Trojan horse who handed over the keys to one of the few remaining European technology powers.
It is a crucial moment for Microsoft which still has huge revenues from its windows operating system, office suite of business software and Xbox game console, but has failed so far to set up a lucrative mobile device business. However defending the criticism, Microsoft has proclaimed that it will make more than $40 profit on each smart phone it sells once it owns the Nokia business, as opposed to the less than $10 now as a result of the marketing costs it pays to Nokia.
Instead of being a critic and cursing Elop, all we have to do is to wait and hope for the best.