Microsoft completes Nokia acquisition today, will it actually help Microsoft?

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Microsoft completes Nokia acquisition today, will it actually help Microsoft?

Eight months after the announcement that Microsoft will acquire Nokia’s devices and services business for around $7.2 billion, Microsoft has now completely acquired Nokia’s said divisions and related infrastructure today (except its manufacturing plants in Chennai and Korea). Nokia’s will now be a completely owned, separately functioning subsidiary of Microsoft. Microsoft will own ‘Lumia’ and ‘Asha’ brands. Nokia is barred from using its brand name on any mobile device for the next 10 years. Nokia Oyj will now be renamed to Microsoft Mobiles Oy. But the move will not be completely physical. All the Nokia employees will still be working in the same place as earlier instead of shifting to Microsoft offices.

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Nokia, as a company, will not be vanished though. It will still own NSN (mobile network infrastructure division), HERE services and Advanced Technologies divisions. Microsoft will pay Nokia for a 4-year license of HERE services which they plan to keep exclusive to its smartphone platform.

Microsoft has always been known as a software company. But now, Microsoft will now be in total control of nearly 90% of total Windows Phone devices that are being sold throughout the world. Microsoft is now officially the second largest mobile phone brand in terms of sales, after Samsung. But there would be a bunch of problems that Microsoft would face after this grand acquisition. It will be forced to take clear steps and reveal its long-term plans to investors as well as consumers in general.

How would it distinguish between Microsoft Mobiles and its other Windows Phone partners?
Whether to keep alive Nokia X Android smartphones or not?

Being in control of both hardware and software is a tricky situation. Microsoft needs to find a way to keep a level playing field between Microsoft Mobiles and its other hardware partners such as Samsung, HTC, Gionee, Karbonn, Xolo, etc. Microsoft has now become both software provider as well as competitor in the same place. Just like Android, Windows Phone is free for all. It could be hard for smaller brands who wish to compete with Windows Phone offerings from Microsoft Mobiles. Nokia itself couldn’t handle a similar situation when they licensed out Symbian OS to Samsung and Sony. If Microsoft succeeds, it could be the first company to do so.

Coming to an even bigger problem, the Nokia X. Custom Android based smartphone from Nokia which dumps Google services for Nokia’s and Microsoft’s services. Microsoft still has to decide whether they want to keep Nokia X alive. Of what we could perceive, Satya Nadella sees services as the way to grow Microsoft rather than hardware or software. In that case, Microsoft can lure more people in using Microsoft services using devices like Nokia X and even other Asha OS based mobile phones.

Microsoft Surface hasn’t been a success story that Microsoft would have liked. Same was the case with Nokia’s Lumia line-up of Windows RT based tablet PC. Microsoft has to choose between Surface and Lumia for its tablet PC future. Microsoft would also be forced to choose between Nokia MixRadio and Xbox Music services for streaming music.

While Microsoft is still busy in increasing its smartphone and tablet market share, Apple and Google have moved on to developing wearable devices like smartwatches and smart glasses. Google has already announced a specialised version of Android for wearable devices like Moto360 and Google Glass. Apple is reportedly working with Nike to make its own wearable device. There were rumours of Nokia working on a smartwatch but we are not sure if the plan will continue as Microsoft still doesn’t have any specialised platform for such devices.

Microsoft has already released almost all of its services and softwares on other platforms such as iOS, Mac OS X and Android. It recently released Microsoft Office for iOS and Android which was very well received by investors as well as consumers. Can Microsoft shift from being a software company to being a services company? What do you think? Will this acquisition help Microsoft? Can Microsoft make a dent in Android and Apple’s market share? Do let us know your thoughts in the comments.

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