Requiem for Nokia Tune

Once the ringtone of the world was the Nokia tune that ringed millions of time around the globe. Now that time has changed. In this company-eats-company business world, yesterday the official announcement has come from Microsoft CEO Steve Ballmer, about the Microsoft’s deal of acquiring the Finnish phone maker’s handset business for $7.2 billion.

Microsoft-CEO-Steve-Ballmer

In the beginning of the 21st century, Nokia had the world mobile market in its pocket selling phones like hot cakes. The durability and more importantly the affordable price ranges of the models line up made it the most sort after and favourite brand in the developing nations. Nokia would’ve have enjoyed the number one status without taking almost the whole of the Asian market. In India the term mobile phone was synonymous to Nokia, and it is not an embellishment.

Time changed. New players with new variants backed up by new technologies flood the market. The downslide of the Nokia story started with the new age smart phones, where in clearly the Google’s Android took the smart phone sector by storm. The Korean electronics giant Samsung made its best strategic partnership with Google to use Android operating system, which comes for free, for all its smart phones. This changed the game altogether putting Samsung in the lime light and Nokia literally lost its game in this sector. Besides the world’s darling iphone from apple also had its presence strongly felt in the smart phone market. Nokia then had only the possibility of reporting its dwindling sales.

 

Mobile Market Share

Not long ago it made a strategic alliance with Microsoft, to use its windows operating system for its smart phone line up the Lumia series. The Nokia‘s idea of revival nearly doomed while the world favoured Android and iOS to Windows 8. The Finnish giant later understood that the Windows choice wasn’t that good. But things had gone beyond repair then. In spite of it Lumia had won numerous awards and had managed to have a techno fan base for its lineup.

Now the Microsoft bid is to acquire Nokia’s mobile phone business unit and that includes the Lumia series. Analysts’ suggestions have come- a mixed opinion- for and against the move.

But why should Microsoft be interested in Nokia? The world looked through the Windows for 90% of the personal computers in the world ran with Window OS. Microsoft enjoyed monopoly in this sector until late 90s. The Google and the infamous open source platforms along Apple’s Mac OS gave a strong fight to it. Once the world wheeled to the smart phones and tablets Microsoft’s market authority thinned. And obviously it lost its hold in this sector toppling its market share from a staggering 90% to 30% as of now.

 

Nokia

Stephen Elop

 

Nokia which enjoyed a 40% mobile market share by 2007 slipped to 15 % and almost ignorable 3% in the smart phone division. Finnish media point their finger on the company’s Canadian head Stephen Elop, who moved from Microsoft to Nokia back in 2011. The unhappy Finnish media have strongly called the deal unfair, quoting Elop as the Trojan horse.

Analysts see the deal is not fair priced given the market value of Nokia. Microsoft seem to be eying the deal as a way to lay their hands on the hardware platform which in turn will boost their software business, yielding those golden days back to the company. The deal proposed now if made, will have Microsoft not just have the Nokia’s handset business but also the patents pertaining to that will accompany. This move could be seen as a better move from the Microsoft side to tighten its competition with its rivals.

Though the deal is slated for early 2014, would become done only with the nod from the shareholders. Or else the deal will have to doze on the papers.

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