How about NOKIA, what will happen to you Blackberry?
Three things also mean that Microsoft has acquired Nokia’s mobile division. Nokia has made a good deal. The deal could even be catastrophic for Microsoft. For BlackBerry, however, it carries the message that the stock of patents may be the only valuable asset.
The launch of Nokia's mobile division, once the world's largest mobile manufacturer, has been going on since 2007. Operating profit, previously at € 7,7 billion, fell to a negative € 2012 billion in 1,1. What could have caused this? That the mobile industry has been shaken by Apple with the introduction of the radically new, real consumer first iPhone, the iPhone.
And in the next stage, the South Korean giant Samsung also gained an advantage over Nokia when it launched an attack on Nokia on all fronts at different price levels with its high-quality smartphones running Google’s Android operating system. Nokia has adapted too slowly, and like an animal that reacts too slowly to changes in the environment in nature, the company’s mobile business has grown out.
Nokia’s board of directors was determined to take the right step and managed to close the best deal possible compared to the division’s prospects. The market obviously agrees with this, as the company’s share price has jumped 40 percent. Microsoft will pay € 5,44 billion for Nokia's 32-strong device and service division, which includes a portfolio of patents, the Nokia brand and mobile hardware.
So Nokia pocketed a nice somm by exiting the mobile business and didn’t expect it to drag other divisions of the company with it. As Nokia’s mobile division’s operating results are still not positive, the deal is downright good. It reduces Nokia’s business and financing risk, but policyholders gain the most from the store.
Can Nokia then attract long-term investors as well? A month ago, Nokia also bought the remaining stake in the joint venture in the joint network company, which it co-owned with Siemens. Together with the sale of this mobile division today, it opens up new business opportunities for Nokia. At present, it is still very difficult to review the company’s profit profile and what return the new legal entity promises to the investor in the future, i.e. it is difficult to take a clear position on Nokia’s valuation. One thing we know for sure, however, is that network activity does not generate positive income and that there is strong competition and a narrow profit margin in this area. So Nokia can’t rest in the knowledge of a job well done. In fact, the fight may continue, but today Nokia seems to be the winner.
On the surface, the deal also looks good for Microsoft because it puts hardware and software management in one hand. This allows Microsoft to finally even copy Apple’s winning recipe. But would this really be the right strategy for Microsoft?
Microsoft has never been a hardware company, and it’s hard to build a culture that presupposes the collaboration of software and hardware engineers. This makes Apple’s culture unique. In the mobile business, Google’s strategy today depicts the same as what Microsoft followed at the time in the age of personal computers. He has developed great software and distributed it on a mass scale to all available and willing hardware vendors. This strategy would have suited Microsoft perfectly, but this ship is already gone.
According to the literature, most acquisitions do not meet expectations. I bet Microsoft will do the same. The 32 employees who previously professed to be proud Nokia employees will not be easy to integrate. For they must now admit that they have lost and are swallowed up by a huge American corporation. Obviously, work ethic is bad, so Microsoft has to step in with lightning speed if it wants to get back on stage with them. Windows Phone traffic is falling short of expectations, and Nokia’s sales figures are also disappointing because it failed to convince consumers using Apple and Samsung smartphones that it was worth switching.
In the mobile division, a huge turnaround will be needed to justify the acquisition and result in a fair return on investment. Today, it is no longer easy to make money with a smartphone because the industry is becoming more and more mature. I can foresee the difficulties that Nokia's integration without frills and that will accelerate innovation will cause. In fact, the exact opposite could happen, and in the end, Microsoft might be forced to describe the deal in Asia.
Microsoft's move also means that there are no obvious customers left to buy the BlackBerry mobile division. The situation of the BlackBerry is getting worse, the number of good opportunities is dwindling. Microsoft sure won't buy it. Google follows a completely different strategy than Apple. And Samsung is not showing the slightest sign of interest.
The problem is that the BlackBerry operating system is different, and the world of smartphones today is shared by Google, Apple, and Microsoft. There is no other player in the industry who would be willing to buy a BlackBerry, because that would mean giving up their own different operating system and replacing it with a less popular operating system.
A member of the BlackBerry board of directors dropped a comment the other day that the company should exit the mobile business and focus on market niches. I agree with this, except that BlackBerry is unsuitable to fill even niche markets in the enterprise segment because it requires a full presence complementary to hardware manufacturing. In order to increase the return on investment, the company should focus exclusively on its existing capabilities in the field of security and data network.
