One of the biggest deals of the past few years was the acquisition by Microsoft of Nokia’s device business. The deal, which was announced in September, 2013, and closed in April, 2014, marked a turning point for the two iconic companies.
This week, Microsoft essentially acknowledged that the deal, which was the last big move engineered by Steve Ballmer, was a mistake, according to Computerworld and other sites. The company took an “impairment charge” of $7.6 billion, which is about the value of the original deal. It also fired 7,800 people, most of whom work in the phone area.
The announcement may let Microsoft turn the page from that era and look ahead. Recently, things seem to be looking up. The company introduced Windows 10, and is using it to make a play in the Internet of Things (IoT), the latest thing that will change everything. It of course is unclear if Windows 10 will become the OS of the IoT, but it is fair to say that it represents a forward-looking approach that has more possibilities than jumping into the device game.
Nokia is another company that has undergone change. The biggest news, of course, is its plan to acquire Alcatel-Lucent. The deal, which was announced in April, would make the company the second-largest mobile equipment manufacturer in the world, Forbes says. Only Ericsson would be larger. Last month, regulators in the United States gave their okay. That’s a big deal, but some approvals are still needed, including from company shareholders.
While the fate of the deal is the biggest issue, it’s interesting to note that the sale to Microsoft is going to only temporarily keep Nokia out of the device business. Last month, TechnoBuffalo reported that Nokia seems likely to reenter the fray when its agreement with Microsoft to stay out of the sector expires next year. The site quotes CEO Rajeev Suri, who told the German site Manager Magazin that the company will look to license devices and its brand name to other companies.
Nokia and Microsoft forever will be tied at the hip because of the 2013 deal. It seems that both are charting aggressive courses. Microsoft, under new leadership, is trying to parlay its still monumental presence in the OS world into a future that doesn’t rest solely on the mobile sector that has largely passed it by. Nokia is seeking to harness its residual skills and high profile in the mobile device area – while remaking itself into a network equipment giant.
Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at [email protected] and via twitter at @DailyMusicBrk.