Nokia’s devices and services is now an official part of the Microsoft family. The Finnish company, who has been struggling in the last couple of years, announced its official deal closure on Friday, about eight months after the beginning of the acquisition. Nokia shareholders and worldwide regulatory agencies approved the $7.5 billion acquisition.
Microsoft will begin using Nokia’s resources to create new devices and services in the coming years. Former Nokia President and CEO Stephen Elop will now serve as the executive vice president of the Microsoft Device Group. This group will oversee hardware, such as Nokia mobile phones, Xbox, Surface, Lumia, Perception Pixel (PPI), as well as a handful of other accessories. Microsoft will continue to honor Nokia customer warranties, as of Friday’s acquisition.
Windows Phone will continue to expand with the newly acquired Nokia technology and services, under “Microsoft Mobile”. Microsoft will now take control of 90 percent of all Windows Phones with this purchase. About 30,000 Nokia employees will be moving to Microsoft.
Microsoft hopes to use this new business and technology to become a rival force for Apple and Google, both of which have had a huge lead on Microsoft in smartphone and tablet market shares. Apple and Google’s Android still account for 96 percent of the market. The purchase of Nokia’s devices and services makes Microsoft the second-largest mobile phone maker, with about 14 percent of the phone hardware market shares.
The remainder of Nokia will be reevaluating its market strategy without its mobile phone division. We will know more once the company posts its first quarter earnings at the end of April. A new CEO will be named at that time, replacing Elop, who is moving to Microsoft. According to reports, Rajeev Suri, currently the chief executive at Nokia Solutions and Networks could be the new CEO of Nokia. Due to tax disputes, Nokia will still operate its Indian manufacturing plant under a contract with Microsoft. “Asha” and “Lumia” trademarks will now be a part of Microsoft, and Nokia won’t be able to use their brand on any mobile devices until 2016.
Last year, Nokia sold over 251 million mobile devices. Lumia’s Windows Phones accounted for 30 million of those sales. Now, Microsoft will manage the rest of Nokia’s lineups, which is an unique mixture of hardware and software.
Oddly enough, some of those devices run Android OS, which will put Microsoft in an interesting stance on how it will manage the hardware with rival software. Microsoft, now with the majority of Windows Phone hardware, will face the challenge of marketing both their newly acquired Windows Phone devices and Windows Phone 8.
Through this acquisition, some suggest that that Microsoft should abandon Windows Phone and begin using Android (the leading mobile OS) to increase sales. And though Microsoft already integrates many of its services (OneDrive, Outlook, Office, etc.) with rivals Android and Apple, Microsoft isn’t giving up on Windows Phone. With the majority control of both Windows Phone hardware and software, Microsoft can plan to create their perfect image for their mobile units. Combined with a decent part of market shares, Microsoft can substantially expand on its already established name in mobile services. Microsoft’s mobile shares continue to grow, meaning that the company and its mobile division have nowhere to go but up.