Microsoft thinks twice about Nokia purchase

According to the Wall Street Journal, Microsoft recently held advanced talks with Nokia about buying its handset business. But it doesn't look like that deal will be happening.

Of course, Microsoft already has an alliance or agreement to work together on Windows Phone handsets, but this would have been something altogether more significant. However, when both parties got around the table, it seems discussions 'faltered' over price and worries about Nokia's slumping market position, among other issues, insiders reported. In fact, they faltered so much that talks aren't likely to be revived.

It is unclear how much Nokia actually wanted off Microsoft or indeed, how much was offered. Nokia's US stock-market value is more than $14 billion, and the company generated nearly half of $40.15 billion in revenue last year from the mobile phone market. So you suspect Nokia was talking big numbers for a buy-out.

Microsoft has already pumped significant cash into Nokia as part of the agreement of 2011, helping the Windows Phone platform to build up its position in the market, but without threatening either iOS or Android. Research firm IDC said Windows Phone represented slightly more than 3% of smartphones shipped worldwide in the first quarter of this year, while about 75% of new smartphones were powered by Android software. That's the gap in a nutshell.

Nokia is the sole major smartphone maker that makes Windows Phones exclusively, with Microsoft needing Nokia to stay financially viable and committed to Microsoft for things to work out. Perhaps the idea of a buy out made sense on that level.

A possible alternative for Microsoft would be to build and sell its own phones, something that has been rumoured in the past. But that wouldn't necessarily be a cheap option and it wouldn't have a brand known for its mobile hardware to sell the end product either.

Right now though, things are staying just as they are.

Source: Wall Street Journal

Written by Mobile Choice
Mobile Choice

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