The big news in the tech world this morning is that Microsoft has bought Nokia’s devices division for $7.2bn or $7.7bn, depending on who you believe. Either way it is a lot of money and these are two iconic brands that dominated the tech landscape in the 1990s. Sadly both have been in decline since then and both need to do something exciting if they are to revive their fortunes. This deal isn’t it.
Microsoft’s problem is that they haven’t made the transition to mobile. The chart above shows just how important that miss is, and explains why Microsoft has lost 40% of its value over the the thirteen years that Steve Ballmer has been CEO. A superficial analysis might suggest that buying Nokia, the world’s second largest mobile business in 2012 by share of devices sold, is a great solution, but as I suspect most of you know Nokia’s problem is that they have lost the smartphone battle. The chart below shows just how badly.
Smartphones are the interesting end of the market, and Microsoft isn’t getting much here. Maybe they can bring life to Nokia’s high end phones, but it isn’t easy to see how. Their main asset in this space, Windows Phone, has been running on Nokia devices for a while without making much of an impression and Microsoft’s history in mobile isn’t strong enough that it’s likely they will come up with a bit of magic that sets the world on fire.
I fear that Microsoft is going the way of HP.