Sep 3 (Lagos) - Microsoft announced that it will bid to buy out Nokia's devices business for $ 7.3 billion and look to complete the deal by the first quarter of 2014. Microsoft is desperate to catch up to Apple and Google in the phone business where it was late to enter the market.





Apple's Iphone and Google's android software control more than 90% of the smart phone market.
Nokia was once the world leader in mobile phone business but has been left behind by Apple's iphone and Samsung phones running on Google's android software. Nokia currently controls less than 6% of the world's smart phone market.






Nokia is also being pushed to the limit in its feature phone business which was once the mainstay of their business especially in countries like India and China where low cost mobile phones outpace the demand for high end smart phones. But even in those markets, Nokia is facing competition from low end sansung phones as well as a range of new companies like micromax, karbon phones and other economic phone options from China that run on Google's android software.






Recently Nokia changed its strategy by focusing on Lumia phones which start from $ 99 in USA and go upto $ 1000 for the latest Nokia Lumia 1020 without a contract. The demand for Nokia Lumia 520 has surged but it has led to a reduction in average selling price which is a negative for the company.





Microsoft will buy the device section of Nokia and hope to catch up to Apple and Google is race for smart phone ecosystems where is badly lags behind.





Nokia will concentrate on its mobile infrastructure business earlier known as Nokia Siemens Network before Nokia bought out Siemens stake in the joint venture earlier this year. Nokia will also focus on its location based services named 'here' which is used in facebook maps as well as in various other applications.





Today's announcement sent shares of Nokia up by more than 40% in pre market trading at the New York Stock Exchange. While this is good news for recent new shareholders, it will not bring joy to long term shareholders of Nokia who have seen their holdings diminish greatly over the past 3 years. Microsoft shares are lower by 5% today as some analysts are calling this move by Microsoft a 'doubling down on a mistake'.





Nokia's current CEO, Mr. Elop will leave Nokia and re join Microsoft. Bookmakers have him as a favorite to replace outgoing Microsoft CEO Steve Balmer who resigned last month.





When the dust settles, the shareholders of Nokia will be left wondering about the outcome of their investments had Nokia adopted Google's android software instead of Microsoft windows software. They will never know the answer to that.




Source - http://www.easykobo.com/News.aspx?id=1752

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