It makes sense for Microsoft to buy all of Nokia. The name of Nokia is far more recognizable when it comes to mobiles. But Microsoft has bought Nokia’s devices business not the name of Nokia itself. This acquisition should result in more tangible benefits for Microsoft’s new Devices division as well. The supply chain of Nokia borders on legendary. This can be used by Microsoft to lean on to expand its manufacturing and provide for more countries and retailers (Chacos, 2013).
The move of Microsoft acquiring Nokia’s Devices & Services business is necessary risk for it to grow in the mobile phone industry. This move also shows that Nokia is admitting that it doesn’t have enough resources to compete with Samsung and Apple says the analysts.
Microsoft has made an announcement that it will pay 3.79 billion euros for “substantially all” of the Nokia’s Devices & Services business and another 1.65 billion euros for the license of Nokia’s patents at the close of the transaction (Ricknäs, 2013).
The deal made by Microsoft and Nokia is very tremendous for both the companies. It marks the end of an era for Nokia. Nokia will now focus on mobile networking equipment and provide mapping and location services. The challenge of integrating the two companies is very high as the deal should be positive for both the companies (Ricknäs, 2013). The deal is made even harder by the fact that Microsoft is going through its own biggest ever re-organization.