Microsoft has agreed a deal that will see them buy the mobile phone division of Nokia for a reported £4.6bn. Nokia shares leapt 45% on the news which would also see Nokia patents licensed to Microsoft.
Once the biggest and most popular mobile phone maker in the world, Nokia has struggled to keep up with the likes of Apple and Samsung. HTC also made huge strides while Google’s purchase of Motorola has also changed the way the industry looks. The release of the Nokia Lumia range has seen the Finnish manufacturer claw back some of its strength but they are a shadow of the company they once were.
The Lumia range is based on the Microsoft Windows Phone operating system and has led the way for the operating system as it attempts to take market share from iOS and Android. The move by Microsoft, therefore, is likely at least to ensure that Windows Phone still has a phone base to work from.
Microsoft itself, though, has faced some struggles. PC sales have dropped significantly as more and more people turn to tablet devices and smartphones instead of bulkier and more cumbersome desktop computers. Even laptop sales have dwindled. Microsoft’s Surface tablets failed to excite and the company has been slammed for being slow to enter the mobile market.
The coupling between Nokia and Microsoft is unlikely to change too much in the near future. Indeed, the deal needs approval from Nokia’s shareholders and board, although the 45% jump in share prices following the news is some indication of the positive sentiment that the deal is receiving.
Nokia remains the second largest handset manufacturer behind Samsung. Apple is in third place but this is hardly surprising considering Apple essentially only has one phone on sale at a time compared to the various models offered by their competitors. Could this deal change the landscape once more?