Microsoft has obtained Nokia’s devices and services for an astonishing $8 billion. The Microsoft-Nokia venture began by uniting its Windows OS into the phone and introduced the Lumia brand into the industry. The idea originated from the former CEO of Microsoft, Steve Ballmer.
Windows company spent a massive $8 billion of wasted money on its failed Nokia experiment, which includes the reconstruction of Nokia and the division of payments for its employees. Employees, estimating at least 25,000, were hired by Microsoft as part of its acquisition of Nokia’s phone business. However, there has been a streak of cutbacks over the years, which has led to the end of Microsoft’s mobile business.
Last week, Microsoft, which is known for its Office 365 for small business, has terminated close to 2,000 employees worldwide — including 1,350 in Finland. They announced that it is “reforming” the company’s phone business. The movement practically took a $950 million financial hit for Microsoft, which marks the end of the Lumia phone brand.
Considering Windows Phone has an excellent operating system, its applications pose as a challenge for the company. Consumers do not want to invest in mobile devices until they are assured with a good threshold of popular applications. Microsoft and Nokia’s Windows Phone did not sell well which would be favourable enough to attract application developers to commit its services to the Windows Phone platform.
Microsoft has achieved unique features and services with Windows 10. Whether it is an Xbox One which runs on Windows 10 or Microsoft Office 365 for business, it surely is an achievement to run the operations of major platforms seamlessly. However, only a certain number of consumers in mobile was able to appreciate this.
Of course, many had high hopes for the partnership of Microsoft and Nokia, unfortunately it did not bear fruit. Microsoft has been slowly disposing of the manufactured phones. Microsoft announced that they agreed to sell the smartphone business for $350 million to Foxconn. It is ironic though that Nokia devices will be built into Android devices by a Chinese manufacturer.
Nokia dominated more than 90 percent of the Windows Phone market, but this leaves Microsoft no choice but to let go. Nokia had been rumoured to consider switching to Android. Even Google has tried making its own Android phones but it resulted to selling Motorola to Lenovo for an estimated $2.91 billion in less than two years after acquiring Motorola for $13 billion. Google’s objective in investing was to obtain key patents in the mobile industry. It is vague how Microsoft has benefited from its partnership with Nokia.
There are unconfirmed talks of Microsoft introducing a Surface Phone in the market. The executive vice president of the Windows and Devices Group, Terry Myerson, stated that they are planning to be more focused on their phone product and services. But this does not take away the fact that their invested mobile phone business has failed.