
Microsoft to acquire Nokia - SwaroopH
http://www.microsoft.com/en-us/news/press/2013/Sep13/09-02AnnouncementPR.aspx
======
kyro
Great move by Microsoft.

This is an acquisition that arguably puts Microsoft mobile capabilities above
that of Google's, and closest to Apple's. They're getting industry veterans
with great design talent. They're getting a Lumia product that has the best
build quality of any non-Apple smart phone. They're acquiring proven channels
to access global markets. Both Nokia and Microsoft have been floundering in
the mobile space recently; neither have had any real explosive successes.
Together they might make some really compelling offerings.

I'm not a fan of their mobile OS, but I am a huge fan of Nokia's latest
smartphones, and if Nokia design's talent can figure out how to introduce a
better UI, I'd seriously consider getting The Windows Phone as my next
smartphone.

~~~
joe_the_user
_This is an acquisition that arguably puts Microsoft mobile capabilities above
that of Google 's, and closest to Apple's._

To have this loltastic sentence at the top of hn makes me wonder if MS or some
PR has a bunch of shill accounts they roll out for occasions like this.
Seriously? As the other reply said, they were already together. And losing.
Badly. And hated, broadly.

And the reason the windows phone sucks so badly is that MS tied the PC and
phone UIs together into a "push-me pull-you" (Windows 8 everywhere) that can't
succeed at either task. And so to escape MS will have to back out of their
deal entirely, go back to designing phones and PC OSes separately, and given
MS' ingrown bureaucratic insanity there that seems less than likely.

Grafting a few more limbs onto a failing Frankenstein will ... create a bigger
failing Frankenstein.

~~~
orf
I take it you have never used a Windows Phone. The Lumia's Nokia make are well
designed and high quality, WP8 isn't that bad at all and will undoubtedly get
better in the future. Everyone I've met with a WP device (Which is a lot, a
fair percentage of my coursemates own one) is happy with it.

 _And so to escape MS will have to back out of their deal entirely, go back to
designing phones and PC OSes separately, and given MS ' ingrown bureaucratic
insanity there that seems less than likely._

Why would they ever want to go back to designing them separately? How would
that benefit anyone in any way? In case you hadn't noticed phones _are_
computers now, integration is the future.

~~~
Ives
I bought a Lumia 800 as my first smartphone and I'm not quite happy with it.

\- It lost at least 60% of its value in less than a year (price for a new one
dropped by that much)

\- MS wants me to pay them if I want to build an app to use on my own phone

\- And after I've paid them I can only put three apps that aren't published on
there. If I publish them in the app store and would like to use them myself I
have to _buy my own apps_. So basically just give them money.

\- No significant software updates

All in all, it's a good dumb phone, but it's not a great smartphone.

~~~
orf
It costs like $19 to register an account on the WP dev centre (or free if you
are a student), that's less than Apple and Google charge. For that you get
Visual Studio and Blend all set up to develop with and can publish apps to the
store.

~~~
cbr

        less than Apple and Google charge
    

What your parent wants to do, "build an app to use on my own phone", is free
on Android.

~~~
Aaronontheweb
It's free to build an app and deploy it on your own Windows Phone(s) too - you
only have to pay if you want to distribute it through the Windows Store.

~~~
yulaow
It just changed some days ago

Since there, you CAN'T deploy a personal app in your wp8 because you need to
unlock it first and to do that you need to have a developer account.

------
yalogin
Motorola and now Nokia, the last of the previous era big wigs have fallen. 13
years ago Lucent, Motorola, Ericsson, Sun, Nortel were huge. Now they are all
gone. Even HP, Dell are no longer leading. That is a really short time span
for a company to be on top of the world and disappear. Is this the expected
life span of a tech company?

~~~
danieldk
_Motorola and now Nokia, the last of the previous era big wigs have fallen._

Actually, Nokia was slowly and steadily on a rebound in the markets where they
were traditionally strong. E.g. market shares of Windows Phone in the five
largest European economies has grown from 4.9% a year ago to 8.2% now [1].
That's almost half the marketshare of iOS (17.3%).

Most of those units were Nokia Lumias.

Sure, it's not where they were years ago percentage-wise, but the smartphone
market has grown enormously since then, and WP is showing good growth (except
in the US).

Source: [http://www.nu.nl/tech/3565096/windows-phone-groeit-nieuwe-
sm...](http://www.nu.nl/tech/3565096/windows-phone-groeit-nieuwe-
smartphonegebruikers.html)

~~~
whattssonn
Are those WP's in the hands of customers or still in the sales chanel? I
suspect the last, and i do not trust those numbers. It's MS after all. If you
don't know what i mean with that last sentence then learn the "classics"
first.

Btw, nu.nl is not a source, really not a source. Tweakers.net is also not a
source, too biased (i know you didn't mention tweakers, just sayin').

Sent from my iPad

~~~
danieldk
_Are those WP 's in the hands of customers or still in the sales chanel?_

The report [1] speaks of sales and actually claims that 42% of the sales are
actually coming from feature phone owners (who probably like the price point
of the Lumia 520 and all). Retail channels are not feature phone owners ;).

 _Btw, nu.nl is not a source, really not a source._

Of course it's a source, but you can dispute its reliability. For a
substantial part of the Dutch population it is reliable enough to read daily.
And it's not as if they have an agenda here.

 _Tweakers.net is also not a source, too biased (i know you didn 't mention
tweakers, just sayin')._

So, what's the point of dragging Tweakers.net into the discussion?

[1] [http://www.kantarworldpanel.com/Global/News/Record-share-
for...](http://www.kantarworldpanel.com/Global/News/Record-share-for-Windows-
phone)

------
anomaly_
I found this statement interesting - "Microsoft will draw upon its overseas
cash resources to fund the transaction." I've seen it mentioned quite a few
times that tech companies end up with massive overseas cash reserves they
can't repatriate for tax reasons. Anyone with better knowledge of finance/tax
want to chime in with whether this makes the deal even more attractive for MS?

~~~
tanzam75
The corporate tax rate in the United States is 35%. The corporate tax rate in
Ireland is 12.5%. (This is why multinationals like to incorporate their
European subsidiaries in Ireland.)

If Microsoft moved money in the United States, it would pay the difference in
taxes -- namely, 22.5%. But if Microsoft spent the money outside the United
States, then it would not pay this difference.

Incidentally, Finland will be reducing its corporate tax rate next year, from
24.5% to 20%.

------
simonh
This is the ultimate indictment of Steve Ballmer's "I like our strategy, I
like it a lot" statement. This is the final admission that their strategy of
licensing a mobile OS to phone manufacturers, just as they licensed desktop
Windows to PC makers, has completely failed. This must have been in the works
for months, so now finally the other shoe has dropped and we know why he had
to leave. There's no way he could save face over something like this.

Just to be clear, the strategy itself wasn't the problem, just look at
Android, the problem was that technically their product was technically
deficient. They failed to execute the strategy effectively. What I have always
wondered is whether this was simply due to hardware limitations of the day, or
whether the old Windows Mobile was deliberately held back technically to
prevent it competing with Desktop Windows. If the former then Microsoft just
suffered from a form of first mover's disadvantage, and a lack of foresight.
If the latter then they richly deserve all the failure they've reaped. I'd
love to know.

~~~
wtracy
Well, it's possible that the model of _selling_ an OS to phone manufacturers
has been destroyed by Google _giving_ an OS to manufacturers as a loss-leader.

~~~
simonh
There's nothing inevitable about that though. It only works if the freebie is
sufficiently attractive. For example being free hasn't helped Linux succeed on
the desktop, despite it's strong position in the server space.

~~~
camus
This can change with the open web as software and services are moving to
webapps and apis, BUT asically , Linux lacks of attractive software ,services
and business providing services , for the public and businesses. And no , Open
Office is not a replacement for MS office, nor Gimp can replace Photoshop for
professionals.

Linux is not hard to learn, has great guis and works on most of the hardware.

There is potential but all the services are not there yet. Android is valuable
because of all the service intergration it offers, not because it is *nix
based , same with IOS.

------
devx
Seems like Elop stayed true to his nickname - of a trojan horse. He never
really worked for Nokia. He's been working for Microsoft the whole time, just
to sell it for this low price.

How the hell are the shareholders okay with this? I'm _shocked_ it sold for
under $10 billion. Nokia's total valuation is about 15 billion, and you'd have
to imagine they'd have to pay a 30 percent premium when buying it, so that's
$20 billion for the whole. I assume the devices division was worth at least
half of that. Didn't Nokia already sell the telecom part?

~~~
trailfox
> Seems like Elop stayed true to his nickname - of a trojan horse.

Wonder if it was intentional to run Nokia into the ground or just sheer
incompetence?

~~~
discodave
Remember Hanlons razor...

------
timdellinger
"Microsoft will draw upon its overseas cash resources to fund the
transaction."

This is an important aspect of the deal - bringing money earned overseas into
the US is often costly (taxes, etc.). As a result, US companies often end up
with cash sitting overseas with nothing to spend it on, and are hesitant to
take the hit that happens when they bring it to the US... so this is a great
way for Microsoft to use that money in an effective way.

According to this article, Microsoft has $60 Billion sitting offshore in order
to avoid US taxes:
[http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple...](http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple-
google-among-top-u-s-companies-parking-cash-offshore-to-reduce-taxes-study-
says/)

~~~
hga
Key graff: " _The average tax rate these companies currently pay to other
countries on this income is just 6.9 percent, well below lower the 35 percent
statutory U.S. corporate tax rate._ "

As I recall we (the US) have the highest corporate income taxes in the
developed world. It would be a gross dereliction of management's duty to
shareholders to repatriate it unless really needed.

~~~
dvmmh
No corporation pays 35%. There are far too many loop holes. The US has the
highest rates ON THE BOOKS if you take ZERO deductions and write-offs.

[http://thinkprogress.org/economy/2013/04/01/1804801/no-
ameri...](http://thinkprogress.org/economy/2013/04/01/1804801/no-american-
corporations-aren039t-paying-the-world039s-highest-tax-rate/)

~~~
hga
Trivially falsified (the link):

" _Total corporate federal taxes paid fell to 12.1% of profits earned from
activities within the U.S. in fiscal 2011, which ended Sept. 30.... And well
below the 25.6% companies paid on average from 1987 to 2008._ "

I wonder just what happened starting in early Federal FY 2009, which started
on October 1, 2008. Perhaps this:
[https://en.wikipedia.org/wiki/Great_Recession](https://en.wikipedia.org/wiki/Great_Recession)?

Now, when we're talking about seriously profitable companies I don't deny
there are tax breaks to be had, some easy, but does anyone think these
companies are better off focusing more on financial engineering or software
and electrical engineering?

You might compare the parking of cash offshore to Microsoft's buying a $100K
Treasury instrument whenever they had too much cash on hand, as their first
CFO was horrified, amazed and delighted to discover.

ADDED: is this double taxation? In another HN item on this, it was commented
that this parked money has already been subject to local taxes:
[https://news.ycombinator.com/item?id=6321925](https://news.ycombinator.com/item?id=6321925)

I know we do that with personal income taxes, absent a tax treaty with the
other nation.

------
peterjs
Software is eating the world. For real now. And it is eating hardware. This is
such a strong force that even old time franchises like Microsoft and Motorola
can't do anything about it. And apparently "pure software" companies don't
mind venturing into it. They know it's software, for the most part, and
believe vertical integration is worth the trouble with the messy hardware
parts.

How deep is the integration anyway? Did Google and Microsoft end up owning the
manufacturing plants? Apple is known to outsource the manufacturing itself.

------
sravfeyn
This news may sound exciting/disappointing to the developed countries, but it
is certainly extremely disappointing for people in third-world countries,
especially India.

It is not at all hyperbole to say 'Nokia played a key role in India's mobile
penetration'. They sell affordable, reliable and rigid phones for rough use in
rural places of India. And I think it's true for most other countries like
Africa. On the other hand Microsoft mostly makes premium software and
hardware. I don't know any affordable tool(w.r.t developing countries) from
Microsoft. This may put Microsoft in a better position in terms of smartphone.
But in other terms this may be a step towards 'diminishing power of poor
people'.

~~~
vshade
On the other hand, the low end lumias are more usable than most of same priced
android phones in Brazil, I know that here and parts of africa is the way the
market is going. I hope they don't stop serving this market.

------
richardjordan
I think this has been expected since the Nokia Windows Phone bet. I suspect
that this is not unrelated to the Ballmer departure.

I'm not sure it does either company much good. If anything it looks to me like
a panic move of two companies who while from te outside they seem huge and
successful to many are actually seeing the writing on the wal and have no real
plan for the future.

This won't make Microsoft competitive with Apple where it wants to be despite
the hopes of Redmond.

------
ximeng
Annual cost synergies of 600MM within 18 months - sounds like they plan to
kill 3000 jobs.

[http://www.microsoft.com/en-
us/news/download/press/2013/Stra...](http://www.microsoft.com/en-
us/news/download/press/2013/StrategicRationale.pdf) (page 21)

------
annnnd
Nokia, rest in peace - we will miss you. Your phones were legendary.

~~~
harrytuttle
Erm, they still are and will be in the future.

they bagged the guys who designed them as well.

~~~
nextw33k
You might be unfamiliar with what happens after a corporate merger.

Usually there is a decision to remove duplication within the corporation. If
you were Elop next year running MS in Redmond, who would you lay off? The
people in your building or those in the opposite side of the world in Finland?

Update: On a side note, manufacturing usually stays until the machines are no
longer worth using. Then they shut the place down claiming inefficiencies and
build a new factory somewhere else. They don't mention the lack of investment
for 10 years of course.

~~~
gtirloni
On the software front, that already happened when Nokia decided to use WP8 and
ditch their own software.

On the hardware front, MS might actually enjoy having more hardware engineers
to help with the Surface/Xbox stuff.

HR, payroll, etc might be not that safe though.

------
cpeterso
The press release says Microsoft will acquire Nokia’s Devices & Services
business and license Nokia’s patents and mapping services. So what happens to
the _rest_ of Nokia?

~~~
tanzam75
> _So what happens to the rest of Nokia?_

Nokia keeps the other two divisions.

Nokia is now primarily a telecoms infrastructure company, like Alcatel-Lucent.
They're pretty closely matched. Alcatel-Lucent had €14.4 billion of revenues
in 2012, while Nokia Siemens Networks took in €13.1 billion of revenues.

There's also the mapping division, but that's just 10% of the new Nokia's
revenues. I'm surprised Microsoft did not buy it, as Google and Apple both own
their own maps. In fact, I wonder if the mapping division wasn't what scuttled
the previous attempts to reach a deal.

~~~
tincholio
> Nokia Siemens Networks

NSN is no longer Nokia Siemens Networks; it's Nokia Solutions and Networks
now, and Siemens is no longer part of it.

~~~
tanzam75
The deal closed in August 2013. It would have been inaccurate to refer to it
as Nokia Solutions and Networks when giving 2012 results.

------
IanChiles
And now Microsoft has a hardware division. I can easily see most hardware
vendors being ousted by the trio of Google/MS/Apple - all of whom now either
make or have been making their own hardware to go along with their software.
And so the walled garden grows...

~~~
spullara
They already have several hardware products including Xbox, Kinnect,
keyboards, mice, and the Surface.

~~~
kabdib
With the exception of the folks doing keyboards (which they have been serially
been screwing up for the last ten years) Microsoft has some very good hardware
people. The Surface was a nice piece of kit, but way expensive (for
unavoidable reasons, I hear) and running the wrong software (also for
unavoidable reasons).

~~~
cbhl
I remember their developer evangelists were running around showing off some
$3000 Samsung tablet PC prior to the Surface and Surface Pro being released.

People think the Surface is expensive because they compare it to the iPad or
Nexus 7/10 product lines, but it seems like Windows RT is closer to a port of
Windows 8 to ARM than anything else, which makes it seem odd that you'd think
to run Windows Rt on a $200 tablet.

~~~
msh
The surface is using the same CPU as the 199$ nexus 7 (tegra 3) so the
internals are more or less the same.

------
mindprince
I found Microsoft's strategic rationale for this deal interesting:
[http://www.microsoft.com/en-
us/news/download/press/2013/Stra...](http://www.microsoft.com/en-
us/news/download/press/2013/StrategicRationale.pdf)

------
Steko
Speaking of handset makers that missed the revolution, I wonder who will pick
up RIM as they circle the drain. Microsoft is probably the favorite right?

~~~
tanzam75
Now that Microsoft is buying Nokia, it seems unlikely that Microsoft will buy
Blackberry. Unless it's a firesale for the patents.

Note: RIM changed its name to Blackberry Ltd, with a stock ticker of BBRY.

~~~
bodyfour
I'd say Blackberry is the big loser in this deal, since it probably takes one
of their more plausible options off the table.

~~~
Steko
RIM's two selling points still seem as relevant as they did last week for MS:
patents and the loyal but shrinking customer base.

~~~
tanzam75
How loyal would the customer base be if Blackberry switched to Windows Phone?
Would they be any more loyal than Symbian users when Nokia did the transition?

This is why I mention only the patents. Those are clearly valuable. The
customer base is debatable.

~~~
Steko
If Blackberry goes into liquidation the customer base breaks more or less like
the market and WP get's .1% market share. Otherwise if they buy BB and can
hang onto half of those customers. That would almost double WP's market share.
Those customers are worth more to also ran WP than anyone else.

------
cicloid
With the apparent growing trend on emerging markets of Windows Phones (the
Lumia series produced by Nokia, and pushed by carriers on LATAM like
Telcel/America Movil)

This seems like a great move from MS, they have bought more runway.

But come on, the move was telegraphed a couple of years ago.

------
test001only
What would this mean for all the Nokia feature phones ? The latest Asha series
was very good and selling pretty well at least in India. How would this figure
in MS strategy? Are they going to ditch it? That would be sad, because Nokia
still makes phones that can withstand rough use. On the other side would Nokia
start manufacturing Laptop in future. I would really like Nokia design team to
come up with a good Windows laptop!

~~~
apike
One of Microsoft's documents about the acquisition calls out that it is
getting the Asha brand and a 10-year license to the Nokia brand for feature
phones, so I expect that line will stay for now.

~~~
abrowne
I wonder if the Asha design will go from Meego-like with Nokia squircles to a
Metro-like square theme? I personally love my Asha 501, but wouldn't want a
WP8-light version.

Also, will they "upgrade" Nokia Xpress's (proxy browser) backend to use the IE
engine in place of Gecko?

------
ChuckMcM
Wow, I can't say I'm completely surprised but still. It is an amazing thing.
It has to be pretty scary these days to be a phone maker.

------
jcrei
The old fat couple in the room had a dance and #microsoft just ran out of
things to say, so in order to avoid an awkward moment (high end sales are
abysmal) he proposed. #nokia looked around, didn't want to die alone, and like
any scared middle aged woman, said yes.

------
wfunction
I hope Ballmer and Gates have a dedicated CEO in mind now that Ballmer's
leaving... very few people will be able to lead a company this large, and it
will be quite a tragedy if Microsoft's reputation declines and takes down
Nokia with it.

~~~
magickastle
I heard a rumor that Paul Graham is being courted, but it is probably
disinformation.

~~~
kabdib
Microsoft could do a lot worse :-)

------
simula67
Slightly off-topic : For hackers outside the USA/EU I think Microsoft
succeeding can be a bad thing since Macs are really expensive here and
Microsoft silently allowing piracy means that everyone uses Windows. I feel
that ISVs better supporting Linux would be a nice thing and one of the
important things to happen for that is for Windows to loose its monopoly (
second is of course some sort of agreement between all Linux distros around
some standard ). I can't but feel that is to be a distant dream, since
Microsoft seems to have infinite pockets and can buy their way out of any
trouble for years to come.

------
thewarrior
Microsoft has destroyed companies before :

See :
[http://www.theregister.co.uk/2009/09/09/microsoft_destroyed_...](http://www.theregister.co.uk/2009/09/09/microsoft_destroyed_i4i_filing/)

------
josephscott
I wonder if this played into Ballmer leaving. Odd to have a massive re-org and
massive purchase, only to have the CEO turn around and leave right afterwards.

~~~
nextw33k
The timing of this is completely laid out. It looks too perfect and these
deals take time to arrange and agree, they are not done in a week.

------
general_failure
So, is there any Nokia left after all this?

~~~
tanzam75
> _So, is there any Nokia left after all this?_

Yes, it leaves Nokia Siemens Networks and HERE Maps.

Last quarter, NSN accounted for 49% of Nokia revenues, and 108% of operating
profit. (Not a typo -- the phone division lost money.) HERE Maps is
insignificant, but for some reason Nokia wanted to hang on to it.

So, Nokia now has a slightly increased operating profit, plus an extra €5.4
billion from Microsoft. According to the press release, when you subtract out
the purchase price for the "S" half of NSN, Nokia has €7.8 billion in net
cash. For a company that closed yesterday at a market cap of €11 billion.

