nokia and microsoft merger case study

Microsoft Corporation’s Acquisition of Nokia Case Study

The Microsoft Corporation purchased the Nokia phone business in 2014 for approximately $7.2 billion. Although Nokia could be labeled as a profitable business during that time, it was a downstream customer for Microsoft. Thus, it was unclear whether the deal was beneficial for Microsoft since Nokia was not even a leader in the mobile phone industry.

The issue that Microsoft had to resolve was the negotiation process between the companies as the negotiators were from different cultural origins: Microsoft is an American company, while Nokia is a European (Finnish) one. What is more, the strategies and aims of both companies were different: while Microsoft was trying to become present in the mobile phone market, Nokia wanted to be provided with a serious capital that could help it deal with expensive operations and productions. However, it should be noted that negotiations between the two companies took place before Microsoft acquired Nokia: in 2011, the Windows 7 Platform was presented on Nokia phones. At first, the companies only cooperated to develop new devices and products. Only three years after the first cooperation Nokia was purchased by Microsoft. This decision implies that this type of partnership was profitable for both companies at first.

Another problem of these negotiations is the fact that companies often do not see their counterparts as individuals; thus, one of the companies (Nokia) had to abandon its identity to receive benefits from the synergetic deal. However, as it can be seen from the case study, Windows phones were not as popular as it was expected and did not bring Microsoft visible presence and recognition in the mobile phone market, where Apple and Android were the main leaders.

While the deal might appear as unprofitable at first, it may present some benefits in the long run. Nevertheless, Microsoft is not the first company that chose to purchase a “downstream customer” in order to target a new market where the corporation was not present. Acquiring a company that is not a leader anymore can be a risky decision, and, in Microsoft’s case, it led to a reduction in the value of the company. Moreover, it also brought little benefit to Nokia, although the Finnish company had expected other outcomes. While Microsoft tried to resurrect the former leader in the mobile phone market, Nokia experienced losses and thousands of job cuts due to Microsoft’s workforce management policy in 2014. Thus, the deal was not as profitable as both companies had expected.

One question remains to be answered: why did Microsoft decide to involve in this deal if it was clear that the deal was not profitable? On the one hand, this deal was unlikely to harm Microsoft’s core business. On the other hand, the corporation tried to present a new product (Windows Phone) by purchasing a (once stable) company in decline – not an entirely new approach. It can work if the odds are in your favor. However, as it can be seen, Windows Phone cannot compete with iPhones and Android devices, and Microsoft’s presence in the smartphone market is still relatively small. Android is capable of expanding because this operating system can be installed on multiple devices from various manufacturers (Samsung, LG, Lenovo, Huawei, etc.). Windows 7 and 8 for mobile phones are mostly used on Nokia smartphones that cannot compete with Samsung, not to mention other companies. Thus, Microsoft’s acquisition of Nokia was unprofitable. It is possible to assume that this deal will bring more additional losses in the future.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2021, August 2). Microsoft Corporation's Acquisition of Nokia. https://ivypanda.com/essays/microsoft-corporations-acquisition-of-nokia/

"Microsoft Corporation's Acquisition of Nokia." IvyPanda , 2 Aug. 2021, ivypanda.com/essays/microsoft-corporations-acquisition-of-nokia/.

IvyPanda . (2021) 'Microsoft Corporation's Acquisition of Nokia'. 2 August.

IvyPanda . 2021. "Microsoft Corporation's Acquisition of Nokia." August 2, 2021. https://ivypanda.com/essays/microsoft-corporations-acquisition-of-nokia/.

1. IvyPanda . "Microsoft Corporation's Acquisition of Nokia." August 2, 2021. https://ivypanda.com/essays/microsoft-corporations-acquisition-of-nokia/.

Bibliography

IvyPanda . "Microsoft Corporation's Acquisition of Nokia." August 2, 2021. https://ivypanda.com/essays/microsoft-corporations-acquisition-of-nokia/.

• Change Theory: Synergetic Solutions Inc.
• Nokia Corporation Strategic Management
• Death in The Epic of Gilgamesh and Egyptian Book of the Dead
• Upstream and Downstream Social Marketing
• Nokia Corporation Market Research
• Product and Innovation Management of Nokia
• History of Nokia
• How to Create a Brand Extension of Nokia Phones With Nokia I-Phones
• Nokia Corporation's Financial Failure and Advice
• A Critical Analysis of Nokia Corporation
• Abbott Hospital's Acquisition and Human Resource Issues
• Choice Hotels International and Lewin's Change Model
• Cattaraugus County Rehabilitation Center's Administration
• Koch Industries: Charles and Bill's Sources of Power
• Emirates Airlines' Premium Economy Class

• Microsoft /

Microsoft wasted at least $8 billion on its failed Nokia experiment

By Tom Warren , a senior editor covering Microsoft, PC gaming, console, and tech. He founded WinRumors, a site dedicated to Microsoft news, before joining The Verge in 2012.

Share this story

Microsoft is taking another almost $1 billion hit on its failed Nokia acquisition today. The software maker is "streamlining" its smartphone business, writing off $950 million and cutting 1,850 jobs . The cuts come almost a year after Microsoft wrote off $7.6 billion and cut 7,800 jobs. Only a small number of former Nokia employees will remain at Microsoft, and the company's consumer phone making days are over.

Microsoft has wasted at least $8 billion on its failed Nokia experiment, including the costs of restructuring and severance payments for thousands of employees. Microsoft originally hired 25,000 Nokia employees as part of its $7.2 billion acquisition of Nokia's phone business, but a series of layoffs over the past two years has triggered the end of Microsoft's mobile subsidiary.

Nadella was never interested in running a phone business

Microsoft's Nokia phone business acquisition was always tricky and risky, but it was a deal organized by former CEO Steve Ballmer. It has been clear from the start that Satya Nadella, Microsoft's new CEO, wasn't interested in running a phone business. Nadella announced a strategy shift away from a "devices and services" focus just a couple of months after the Nokia acquisition finalized, and last year the strategy shifted even further away from producing multiple handsets.

Many will argue Microsoft had no choice, as Nokia controlled more than 90 percent of the Windows Phone market and had been rumored to be considering switching to Android. Google's experiment with making its own Android phones resulted in the search giant selling Motorola to Lenovo for $2.91 billion , less than two years after paying $12.5 billion to acquire it. While Google's investment was primarily driven by the need to obtain key patents, it's not clear how Microsoft has benefited from its Nokia deal.

We might not ever know the true reasons for Microsoft's Nokia phone business acquisition, but right now it's clear the company has wasted billions of dollars on a failed experiment to try and claw its way back into the mobile market. Microsoft might be preparing a Surface phone, but if it ever debuts it will only cater to the very few who are interested in phone versions of Windows, and it's not going to be enough to reverse Windows Phone's decline. For everyone else, Microsoft's phone making experiment is truly over.

CEO Satya Nadella’s vision for Microsoft

Elon musk says his posts did more to ‘financially impair’ x than help it, with vids, google thinks it has the next big productivity tool for work, microsoft is confident windows on arm could finally beat apple, the total eclipse shows us how important solar energy is to the us, google’s gemini 1.5 pro can now hear.

More from Microsoft

The future of Xbox: all the news on Microsoft’s strategy shift

Read Phil Spencer’s Microsoft memo on ‘Xbox everywhere’

Microsoft fixes Edge browser bug that was stealing Chrome tabs and data

Microsoft is slowly building to a future where ‘every screen is an xbox’.

• Search Menu
• Browse content in Arts and Humanities
• Browse content in Archaeology
• Anglo-Saxon and Medieval Archaeology
• Archaeological Methodology and Techniques
• Archaeology by Region
• Archaeology of Religion
• Archaeology of Trade and Exchange
• Biblical Archaeology
• Contemporary and Public Archaeology
• Environmental Archaeology
• Historical Archaeology
• History and Theory of Archaeology
• Industrial Archaeology
• Landscape Archaeology
• Mortuary Archaeology
• Prehistoric Archaeology
• Underwater Archaeology
• Urban Archaeology
• Zooarchaeology
• Browse content in Architecture
• Architectural Structure and Design
• History of Architecture
• Residential and Domestic Buildings
• Theory of Architecture
• Browse content in Art
• Art Subjects and Themes
• History of Art
• Industrial and Commercial Art
• Theory of Art
• Biographical Studies
• Byzantine Studies
• Browse content in Classical Studies
• Classical Literature
• Classical Reception
• Classical History
• Classical Philosophy
• Classical Mythology
• Classical Art and Architecture
• Classical Oratory and Rhetoric
• Greek and Roman Papyrology
• Greek and Roman Archaeology
• Greek and Roman Epigraphy
• Greek and Roman Law
• Late Antiquity
• Religion in the Ancient World
• Digital Humanities
• Browse content in History
• Colonialism and Imperialism
• Diplomatic History
• Environmental History
• Genealogy, Heraldry, Names, and Honours
• Genocide and Ethnic Cleansing
• Historical Geography
• History by Period
• History of Emotions
• History of Agriculture
• History of Education
• History of Gender and Sexuality
• Industrial History
• Intellectual History
• International History
• Labour History
• Legal and Constitutional History
• Local and Family History
• Maritime History
• Military History
• National Liberation and Post-Colonialism
• Oral History
• Political History
• Public History
• Regional and National History
• Revolutions and Rebellions
• Slavery and Abolition of Slavery
• Social and Cultural History
• Theory, Methods, and Historiography
• Urban History
• World History
• Browse content in Language Teaching and Learning
• Language Learning (Specific Skills)
• Language Teaching Theory and Methods
• Browse content in Linguistics
• Applied Linguistics
• Cognitive Linguistics
• Computational Linguistics
• Forensic Linguistics
• Grammar, Syntax and Morphology
• Historical and Diachronic Linguistics
• History of English
• Language Evolution
• Language Reference
• Language Variation
• Language Families
• Language Acquisition
• Lexicography
• Linguistic Anthropology
• Linguistic Theories
• Linguistic Typology
• Phonetics and Phonology
• Psycholinguistics
• Sociolinguistics
• Translation and Interpretation
• Writing Systems
• Browse content in Literature
• Bibliography
• Children's Literature Studies
• Literary Studies (Romanticism)
• Literary Studies (American)
• Literary Studies (Modernism)
• Literary Studies (Asian)
• Literary Studies (European)
• Literary Studies (Eco-criticism)
• Literary Studies - World
• Literary Studies (1500 to 1800)
• Literary Studies (19th Century)
• Literary Studies (20th Century onwards)
• Literary Studies (African American Literature)
• Literary Studies (British and Irish)
• Literary Studies (Early and Medieval)
• Literary Studies (Fiction, Novelists, and Prose Writers)
• Literary Studies (Gender Studies)
• Literary Studies (Graphic Novels)
• Literary Studies (History of the Book)
• Literary Studies (Plays and Playwrights)
• Literary Studies (Poetry and Poets)
• Literary Studies (Postcolonial Literature)
• Literary Studies (Queer Studies)
• Literary Studies (Science Fiction)
• Literary Studies (Travel Literature)
• Literary Studies (War Literature)
• Literary Studies (Women's Writing)
• Literary Theory and Cultural Studies
• Mythology and Folklore
• Shakespeare Studies and Criticism
• Browse content in Media Studies
• Browse content in Music
• Applied Music
• Dance and Music
• Ethics in Music
• Ethnomusicology
• Gender and Sexuality in Music
• Medicine and Music
• Music Cultures
• Music and Media
• Music and Culture
• Music and Religion
• Music Education and Pedagogy
• Music Theory and Analysis
• Musical Scores, Lyrics, and Libretti
• Musical Structures, Styles, and Techniques
• Musicology and Music History
• Performance Practice and Studies
• Race and Ethnicity in Music
• Sound Studies
• Browse content in Performing Arts
• Browse content in Philosophy
• Aesthetics and Philosophy of Art
• Epistemology
• Feminist Philosophy
• History of Western Philosophy
• Metaphysics
• Moral Philosophy
• Non-Western Philosophy
• Philosophy of Language
• Philosophy of Mind
• Philosophy of Perception
• Philosophy of Action
• Philosophy of Law
• Philosophy of Religion
• Philosophy of Science
• Philosophy of Mathematics and Logic
• Practical Ethics
• Social and Political Philosophy
• Browse content in Religion
• Biblical Studies
• Christianity
• East Asian Religions
• History of Religion
• Judaism and Jewish Studies
• Qumran Studies
• Religion and Education
• Religion and Health
• Religion and Politics
• Religion and Science
• Religion and Law
• Religion and Art, Literature, and Music
• Religious Studies
• Browse content in Society and Culture
• Cookery, Food, and Drink
• Cultural Studies
• Customs and Traditions
• Ethical Issues and Debates
• Hobbies, Games, Arts and Crafts
• Lifestyle, Home, and Garden
• Natural world, Country Life, and Pets
• Popular Beliefs and Controversial Knowledge
• Sports and Outdoor Recreation
• Technology and Society
• Travel and Holiday
• Visual Culture
• Browse content in Law
• Arbitration
• Browse content in Company and Commercial Law
• Commercial Law
• Company Law
• Browse content in Comparative Law
• Systems of Law
• Competition Law
• Browse content in Constitutional and Administrative Law
• Government Powers
• Judicial Review
• Local Government Law
• Military and Defence Law
• Parliamentary and Legislative Practice
• Construction Law
• Contract Law
• Browse content in Criminal Law
• Criminal Procedure
• Criminal Evidence Law
• Sentencing and Punishment
• Employment and Labour Law
• Environment and Energy Law
• Browse content in Financial Law
• Banking Law
• Insolvency Law
• History of Law
• Human Rights and Immigration
• Intellectual Property Law
• Browse content in International Law
• Private International Law and Conflict of Laws
• Public International Law
• IT and Communications Law
• Jurisprudence and Philosophy of Law
• Law and Society
• Law and Politics
• Browse content in Legal System and Practice
• Courts and Procedure
• Legal Skills and Practice
• Primary Sources of Law
• Regulation of Legal Profession
• Medical and Healthcare Law
• Browse content in Policing
• Criminal Investigation and Detection
• Police and Security Services
• Police Procedure and Law
• Police Regional Planning
• Browse content in Property Law
• Personal Property Law
• Study and Revision
• Terrorism and National Security Law
• Browse content in Trusts Law
• Wills and Probate or Succession
• Browse content in Medicine and Health
• Browse content in Allied Health Professions
• Arts Therapies
• Clinical Science
• Dietetics and Nutrition
• Occupational Therapy
• Operating Department Practice
• Physiotherapy
• Radiography
• Speech and Language Therapy
• Browse content in Anaesthetics
• General Anaesthesia
• Neuroanaesthesia
• Clinical Neuroscience
• Browse content in Clinical Medicine
• Acute Medicine
• Cardiovascular Medicine
• Clinical Genetics
• Clinical Pharmacology and Therapeutics
• Dermatology
• Endocrinology and Diabetes
• Gastroenterology
• Genito-urinary Medicine
• Geriatric Medicine
• Infectious Diseases
• Medical Toxicology
• Medical Oncology
• Pain Medicine
• Palliative Medicine
• Rehabilitation Medicine
• Respiratory Medicine and Pulmonology
• Rheumatology
• Sleep Medicine
• Sports and Exercise Medicine
• Community Medical Services
• Critical Care
• Emergency Medicine
• Forensic Medicine
• Haematology
• History of Medicine
• Browse content in Medical Skills
• Clinical Skills
• Communication Skills
• Nursing Skills
• Surgical Skills
• Medical Ethics
• Browse content in Medical Dentistry
• Oral and Maxillofacial Surgery
• Paediatric Dentistry
• Restorative Dentistry and Orthodontics
• Surgical Dentistry
• Medical Statistics and Methodology
• Browse content in Neurology
• Clinical Neurophysiology
• Neuropathology
• Nursing Studies
• Browse content in Obstetrics and Gynaecology
• Gynaecology
• Occupational Medicine
• Ophthalmology
• Otolaryngology (ENT)
• Browse content in Paediatrics
• Neonatology
• Browse content in Pathology
• Chemical Pathology
• Clinical Cytogenetics and Molecular Genetics
• Histopathology
• Medical Microbiology and Virology
• Patient Education and Information
• Browse content in Pharmacology
• Psychopharmacology
• Browse content in Popular Health
• Caring for Others
• Complementary and Alternative Medicine
• Self-help and Personal Development
• Browse content in Preclinical Medicine
• Cell Biology
• Molecular Biology and Genetics
• Reproduction, Growth and Development
• Primary Care
• Professional Development in Medicine
• Browse content in Psychiatry
• Addiction Medicine
• Child and Adolescent Psychiatry
• Forensic Psychiatry
• Learning Disabilities
• Old Age Psychiatry
• Psychotherapy
• Browse content in Public Health and Epidemiology
• Epidemiology
• Public Health
• Browse content in Radiology
• Clinical Radiology
• Interventional Radiology
• Nuclear Medicine
• Radiation Oncology
• Reproductive Medicine
• Browse content in Surgery
• Cardiothoracic Surgery
• Gastro-intestinal and Colorectal Surgery
• General Surgery
• Neurosurgery
• Paediatric Surgery
• Peri-operative Care
• Plastic and Reconstructive Surgery
• Surgical Oncology
• Transplant Surgery
• Trauma and Orthopaedic Surgery
• Vascular Surgery
• Browse content in Science and Mathematics
• Browse content in Biological Sciences
• Aquatic Biology
• Biochemistry
• Bioinformatics and Computational Biology
• Developmental Biology
• Ecology and Conservation
• Evolutionary Biology
• Genetics and Genomics
• Microbiology
• Molecular and Cell Biology
• Natural History
• Plant Sciences and Forestry
• Research Methods in Life Sciences
• Structural Biology
• Systems Biology
• Zoology and Animal Sciences
• Browse content in Chemistry
• Analytical Chemistry
• Computational Chemistry
• Crystallography
• Environmental Chemistry
• Industrial Chemistry
• Inorganic Chemistry
• Materials Chemistry
• Medicinal Chemistry
• Mineralogy and Gems
• Organic Chemistry
• Physical Chemistry
• Polymer Chemistry
• Study and Communication Skills in Chemistry
• Theoretical Chemistry
• Browse content in Computer Science
• Artificial Intelligence
• Computer Architecture and Logic Design
• Game Studies
• Human-Computer Interaction
• Mathematical Theory of Computation
• Programming Languages
• Software Engineering
• Systems Analysis and Design
• Virtual Reality
• Browse content in Computing
• Business Applications
• Computer Games
• Computer Security
• Computer Networking and Communications
• Digital Lifestyle
• Graphical and Digital Media Applications
• Operating Systems
• Browse content in Earth Sciences and Geography
• Atmospheric Sciences
• Environmental Geography
• Geology and the Lithosphere
• Maps and Map-making
• Meteorology and Climatology
• Oceanography and Hydrology
• Palaeontology
• Physical Geography and Topography
• Regional Geography
• Soil Science
• Urban Geography
• Browse content in Engineering and Technology
• Agriculture and Farming
• Biological Engineering
• Civil Engineering, Surveying, and Building
• Electronics and Communications Engineering
• Energy Technology
• Engineering (General)
• Environmental Science, Engineering, and Technology
• History of Engineering and Technology
• Mechanical Engineering and Materials
• Technology of Industrial Chemistry
• Transport Technology and Trades
• Browse content in Environmental Science
• Applied Ecology (Environmental Science)
• Conservation of the Environment (Environmental Science)
• Environmental Sustainability
• Environmentalist Thought and Ideology (Environmental Science)
• Management of Land and Natural Resources (Environmental Science)
• Natural Disasters (Environmental Science)
• Nuclear Issues (Environmental Science)
• Pollution and Threats to the Environment (Environmental Science)
• Social Impact of Environmental Issues (Environmental Science)
• History of Science and Technology
• Browse content in Materials Science
• Ceramics and Glasses
• Composite Materials
• Metals, Alloying, and Corrosion
• Nanotechnology
• Browse content in Mathematics
• Applied Mathematics
• Biomathematics and Statistics
• History of Mathematics
• Mathematical Education
• Mathematical Finance
• Mathematical Analysis
• Numerical and Computational Mathematics
• Probability and Statistics
• Pure Mathematics
• Browse content in Neuroscience
• Cognition and Behavioural Neuroscience
• Development of the Nervous System
• Disorders of the Nervous System
• History of Neuroscience
• Invertebrate Neurobiology
• Molecular and Cellular Systems
• Neuroendocrinology and Autonomic Nervous System
• Neuroscientific Techniques
• Sensory and Motor Systems
• Browse content in Physics
• Astronomy and Astrophysics
• Atomic, Molecular, and Optical Physics
• Biological and Medical Physics
• Classical Mechanics
• Computational Physics
• Condensed Matter Physics
• Electromagnetism, Optics, and Acoustics
• History of Physics
• Mathematical and Statistical Physics
• Measurement Science
• Nuclear Physics
• Particles and Fields
• Plasma Physics
• Quantum Physics
• Relativity and Gravitation
• Semiconductor and Mesoscopic Physics
• Browse content in Psychology
• Affective Sciences
• Clinical Psychology
• Cognitive Psychology
• Cognitive Neuroscience
• Criminal and Forensic Psychology
• Developmental Psychology
• Educational Psychology
• Evolutionary Psychology
• Health Psychology
• History and Systems in Psychology
• Music Psychology
• Neuropsychology
• Organizational Psychology
• Psychological Assessment and Testing
• Psychology of Human-Technology Interaction
• Psychology Professional Development and Training
• Research Methods in Psychology
• Social Psychology
• Browse content in Social Sciences
• Browse content in Anthropology
• Anthropology of Religion
• Human Evolution
• Medical Anthropology
• Physical Anthropology
• Regional Anthropology
• Social and Cultural Anthropology
• Theory and Practice of Anthropology
• Browse content in Business and Management
• Business Ethics
• Business History
• Business Strategy
• Business and Technology
• Business and Government
• Business and the Environment
• Comparative Management
• Corporate Governance
• Corporate Social Responsibility
• Entrepreneurship
• Health Management
• Human Resource Management
• Industrial and Employment Relations
• Industry Studies
• Information and Communication Technologies
• International Business
• Knowledge Management
• Management and Management Techniques
• Operations Management
• Organizational Theory and Behaviour
• Pensions and Pension Management
• Public and Nonprofit Management
• Strategic Management
• Supply Chain Management
• Browse content in Criminology and Criminal Justice
• Criminal Justice
• Criminology
• Forms of Crime
• International and Comparative Criminology
• Youth Violence and Juvenile Justice
• Development Studies
• Browse content in Economics
• Agricultural, Environmental, and Natural Resource Economics
• Asian Economics
• Behavioural Finance
• Behavioural Economics and Neuroeconomics
• Econometrics and Mathematical Economics
• Economic History
• Economic Methodology
• Economic Systems
• Economic Development and Growth
• Financial Markets
• Financial Institutions and Services
• General Economics and Teaching
• Health, Education, and Welfare
• History of Economic Thought
• International Economics
• Labour and Demographic Economics
• Law and Economics
• Macroeconomics and Monetary Economics
• Microeconomics
• Public Economics
• Urban, Rural, and Regional Economics
• Welfare Economics
• Browse content in Education
• Adult Education and Continuous Learning
• Care and Counselling of Students
• Early Childhood and Elementary Education
• Educational Equipment and Technology
• Educational Strategies and Policy
• Higher and Further Education
• Organization and Management of Education
• Philosophy and Theory of Education
• Schools Studies
• Secondary Education
• Teaching of a Specific Subject
• Teaching of Specific Groups and Special Educational Needs
• Teaching Skills and Techniques
• Browse content in Environment
• Applied Ecology (Social Science)
• Climate Change
• Conservation of the Environment (Social Science)
• Environmentalist Thought and Ideology (Social Science)
• Natural Disasters (Environment)
• Social Impact of Environmental Issues (Social Science)
• Browse content in Human Geography
• Cultural Geography
• Economic Geography
• Political Geography
• Browse content in Interdisciplinary Studies
• Communication Studies
• Museums, Libraries, and Information Sciences
• Browse content in Politics
• African Politics
• Asian Politics
• Chinese Politics
• Comparative Politics
• Conflict Politics
• Elections and Electoral Studies
• Environmental Politics
• European Union
• Foreign Policy
• Gender and Politics
• Human Rights and Politics
• Indian Politics
• International Relations
• International Organization (Politics)
• International Political Economy
• Irish Politics
• Latin American Politics
• Middle Eastern Politics
• Political Behaviour
• Political Economy
• Political Institutions
• Political Theory
• Political Methodology
• Political Communication
• Political Philosophy
• Political Sociology
• Politics and Law
• Public Policy
• Public Administration
• Quantitative Political Methodology
• Regional Political Studies
• Russian Politics
• Security Studies
• State and Local Government
• UK Politics
• US Politics
• Browse content in Regional and Area Studies
• African Studies
• Asian Studies
• East Asian Studies
• Japanese Studies
• Latin American Studies
• Middle Eastern Studies
• Native American Studies
• Scottish Studies
• Browse content in Research and Information
• Research Methods
• Browse content in Social Work
• Addictions and Substance Misuse
• Adoption and Fostering
• Care of the Elderly
• Child and Adolescent Social Work
• Couple and Family Social Work
• Developmental and Physical Disabilities Social Work
• Direct Practice and Clinical Social Work
• Emergency Services
• Human Behaviour and the Social Environment
• International and Global Issues in Social Work
• Mental and Behavioural Health
• Social Justice and Human Rights
• Social Policy and Advocacy
• Social Work and Crime and Justice
• Social Work Macro Practice
• Social Work Practice Settings
• Social Work Research and Evidence-based Practice
• Welfare and Benefit Systems
• Browse content in Sociology
• Childhood Studies
• Community Development
• Comparative and Historical Sociology
• Economic Sociology
• Gender and Sexuality
• Gerontology and Ageing
• Health, Illness, and Medicine
• Marriage and the Family
• Migration Studies
• Occupations, Professions, and Work
• Organizations
• Population and Demography
• Race and Ethnicity
• Social Theory
• Social Movements and Social Change
• Social Research and Statistics
• Social Stratification, Inequality, and Mobility
• Sociology of Religion
• Sociology of Education
• Sport and Leisure
• Urban and Rural Studies
• Browse content in Warfare and Defence
• Defence Strategy, Planning, and Research
• Land Forces and Warfare
• Military Administration
• Military Life and Institutions
• Naval Forces and Warfare
• Other Warfare and Defence Issues
• Peace Studies and Conflict Resolution
• Weapons and Equipment

• < Previous chapter
• Next chapter >

18 Microsoft’s Acquisition of Nokia

• Published: June 2022
• Cite Icon Cite
• Permissions Icon Permissions

In September 2013, US-based computing major, Microsoft Corp. (Microsoft) and Finland-based communications company, Nokia Corporation (Nokia), announced that both the companies would enter into a transaction where Microsoft would acquire Nokia’s devices and services segment, Nokia’s patents and license and use Nokia’s mapping services, for US$ 7.2 billion. Earlier in February 2011, Nokia had entered into a strategic alliance with Microsoft in a bid to combine the traditional strengths of the two companies to create synergies. With the acquisition of Nokia, Microsoft aimed to build on its partnership with the former by accelerating the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing. The case analyses and highlights the acquisition strategy from the strategic fit perspective as well as the benefits/advantages envisaged by both the companies.

Signed in as

Institutional accounts.

• Google Scholar Indexing
• GoogleCrawler [DO NOT DELETE]

Personal account

• Sign in with email/username & password
• Get email alerts
• Save searches
• Purchase content
• Activate your purchase/trial code

Institutional access

• Sign in with a library card Sign in with username/password Recommend to your librarian
• Institutional account management
• Get help with access

Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. If you are a member of an institution with an active account, you may be able to access content in one of the following ways:

IP based access

Typically, access is provided across an institutional network to a range of IP addresses. This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account.

Sign in through your institution

Choose this option to get remote access when outside your institution. Shibboleth/Open Athens technology is used to provide single sign-on between your institution’s website and Oxford Academic.

• Click Sign in through your institution.
• Select your institution from the list provided, which will take you to your institution's website to sign in.
• When on the institution site, please use the credentials provided by your institution. Do not use an Oxford Academic personal account.
• Following successful sign in, you will be returned to Oxford Academic.

If your institution is not listed or you cannot sign in to your institution’s website, please contact your librarian or administrator.

Sign in with a library card

Enter your library card number to sign in. If you cannot sign in, please contact your librarian.

Society Members

Society member access to a journal is achieved in one of the following ways:

Sign in through society site

Many societies offer single sign-on between the society website and Oxford Academic. If you see ‘Sign in through society site’ in the sign in pane within a journal:

• Click Sign in through society site.
• When on the society site, please use the credentials provided by that society. Do not use an Oxford Academic personal account.

If you do not have a society account or have forgotten your username or password, please contact your society.

Sign in using a personal account

Some societies use Oxford Academic personal accounts to provide access to their members. See below.

A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions.

Some societies use Oxford Academic personal accounts to provide access to their members.

Viewing your signed in accounts

Click the account icon in the top right to:

• View your signed in personal account and access account management features.
• View the institutional accounts that are providing access.

Signed in but can't access content

Oxford Academic is home to a wide variety of products. The institutional subscription may not cover the content that you are trying to access. If you believe you should have access to that content, please contact your librarian.

For librarians and administrators, your personal account also provides access to institutional account management. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more.

Our books are available by subscription or purchase to libraries and institutions.

• About Oxford Academic
• Publish journals with us
• University press partners
• What we publish
• New features  
• Open access
• Rights and permissions
• Accessibility
• Advertising
• Media enquiries
• Oxford University Press
• Oxford Languages
• University of Oxford

Oxford University Press is a department of the University of Oxford. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide

• Copyright © 2024 Oxford University Press
• Cookie settings
• Cookie policy
• Privacy policy
• Legal notice

This Feature Is Available To Subscribers Only

Sign In or Create an Account

This PDF is available to Subscribers Only

For full access to this pdf, sign in to an existing account, or purchase an annual subscription.

• Best Buy Geek Squad layoffs
• The best gaming TV for 2024
• Google's Find My Device launched
• Solar Eclipse 2024
• Best Mint alternative

What you need to know about Microsoft's acquisition of Nokia

Nokia hasn't always been a phone manufacturer. The company dabbled in paper products, footwear and tires before it became involved in the wireless industry. Starting today , it begins a new chapter as its Devices and Services division gets swallowed up by Microsoft in a $7 billion deal. Change is in the air, but very little is known about what exactly will be different now that the two companies are coming together in holy matrimony . Neither party was legally allowed to discuss details about the acquisition in public.

Today, Microsoft gets to flip the switch and Nokia gets to switch its business cards. (A shame, since its cards are very happy-go-lucky.) But this is just the beginning of a lengthy move-in process in which the two companies can finally start working together as one. Chances are we'll still be asking questions about the merger several months down the road, but as execs explained to us, these kinds of procedures take time to get everything sorted out. For now, what should we know about the merger?

What is it?

Microsoft will take over Nokia's Devices and Services business, which includes both Smart Devices and Mobile Devices. In other words: The Lumia, Asha and X series are now all under Microsoft's umbrella. Design teams, supply chain, accessories, employees, developer relations and most of Nokia's manufacturing plants and testing facilities are also on Microsoft's side, as are most of the company's services like MixRadio, Store and more. Here, Nokia's mapping entity, is considered a separate business and isn't included as part of the deal, but Microsoft has agreed to a 10-year licensing agreement. (Additionally, Nokia also retains its Solutions and Networks division, its CTO office and a large number of patents.)

Microsoft will also control IP agreements and any third-party contracts related to Nokia's devices. Symbian should fit in this category, as well as any partnerships Nokia had with Qualcomm and other silicon companies. And in case you were wondering, the company's imaging talent will make the switch over to Microsoft as well.

Since Microsoft retains rights to the Lumia and Asha brand names, the company will take advantage of them for the time being. Anything Nokia had in the pipeline will likely still come out in the next several months (unless Microsoft decides to veto certain products). A true Microsoft phone probably won't be seen for at least 10 months, since it usually takes a long time to push a device through the development process.

Stephen Elop , who served as Nokia's president and CEO, is now executive VP of Microsoft's Devices Group and will report directly to CEO Satya Nadella. In this role, he oversees the company's entire hardware lineup: phones, tablets, Surface, Xbox, Perceptive Pixel products (PPI) and even accessories. Additionally, 25,000 Nokia employees will make the transition over to Microsoft.

Why is this happening?

Microsoft and Nokia were already the closest of BFFs, but they still had to act as separate companies. Even though the two collaborated frequently, they each had to go through different development processes; both companies had their own resources, tools, culture and trade secrets, which created a lot of inefficiencies. By bringing Nokia into the fold, Microsoft can now work on both firmware and hardware from day one, theoretically making the process of developing, manufacturing and distributing a new phone or tablet much more efficient.

Additionally, Microsoft claims that with a greater understanding of how hardware and software work together, it will be able to apply that knowledge to its relationships with existing partners, developers and operators.

What will happen to my phone?

If you own a Nokia device, nothing should change. Your phone won't mysteriously stop working or explode, but even if it does, Microsoft will honor any warranties you had in the first place. In a blog post, Elop reiterated his commitment to continued support for featurephones, as well as the Lumia, Asha and X lineups. We'd like him to be more specific, of course, but he likely means that Microsoft will stick to the current roadmap of new devices and firmware updates. Whether the company drifts away from this strategy later on is a different matter entirely, but existing Nokia users shouldn't notice any changes to their phones as a result of this transition.

In a similar fashion, owners of other Windows Phones won't see any changes either. At the moment, there isn't any reason to suspect that Microsoft will magically stop working with other companies on updates or new devices; this wasn't the case with the company when it launched the Surface, and it appears that Microsoft is actually expanding its relationships with other partners, as we'll discuss shortly.

How do Microsoft's partners feel?

Aside from generic press statements, most of Microsoft's partners aren't discussing how they feel about the acquisition, but we're guessing there are mixed emotions. Reports say that Samsung teamed up with Google in China last month, arguing with regulatory officials that Nokia's patent-licensing fees would go up under Microsoft rule; in fact, licensing in general has always been, and will continue to be, a concern. However, a handful of new companies have stepped forward as Windows Phone partners, including LG, ZTE and Lenovo and several Indian phone makers, which suggests that many companies are embracing the change instead of shunning it.

Perhaps these new partners are just open to the idea of launching a Windows Phone and are just waiting to see what happens after today's merger. After all, few if any of the listed companies have announced their plans, and the rumor mill is curiously dry. Granted, it's never a bad idea to have a partnership like this in your back pocket just in case it comes in handy. If any of Microsoft's partners (outside of Samsung) are worried about not getting equal treatment, they aren't speaking up about it -- of course, this wouldn't be anything new, since Nokia was considered the Windows Phone poster child ever since it started supporting the platform in 2011, so not much has actually changed in that sense.

How does the future look?

According to Microsoft, the future looks bright . However, mergers are historically much messier than the flowery press releases lead you to believe. They're often riddled with layoffs , and customer-support issues, so it's hard to believe that everything will just go as smoothly as planned.

As more details about the transaction come to light, there are two areas that we'll be paying close attention to. The first is organizational: Will Microsoft keep all 25,000 employees for the long term, or will it have to streamline the workforce as is often the case? The second is in the form of device support. While Microsoft says it will continue to support Nokia's entire portfolio, will it eventually drop the X because it runs on Google's mobile OS? Will Lumia phones get Windows Phone updates before everyone else, or will the company treat all of its partners fairly? We still have plenty of questions, and now that Nokia's device division is part of "One Microsoft," the company can finally start answering them.

Latest Stories

The bootleg nintendo network replacement no longer requires jailbreaking.

The Pretendo Network, an open-source Nintendo Network alternative, no longer requires a hacked Wii U console. With Nintendo’s servers for the obsolete console shutting down on Monday, the Pretendo Network shared a new workaround that provides limited access to its homebrew servers.

Arturia stuffed almost all of its software emulations into this new keyboard

Arturia just released the 61-key AstroLab synthesizer, which is basically the company’s Analog Lab in hardware form. It allows standalone access to the vast majority of the company’s software emulations.

Apple Vision Pro two months later: A telepresence dream

I've had the Vision Pro for two months, but it hasn't transformed the way I live.

Formula E kills its latest junior series just days before the first scheduled race

Formula E has killed off its latest junior series just days before the first scheduled race. Reports suggest the cancellation was due to issues with an investor.

The owner of WordPress has bought Beeper, the app that flipped the bird to Apple’s iMessage supremacy

WordPress and Tumblr owner Automattic has bought Beeper, the maker of the Beeper Mini app that challenged Apple’s iMessage dominion late last year. Although it ultimately lost that battle, the incident gave the DOJ more ammunition in its antitrust suit against the iPhone maker.

You can now lie down while using a Meta Quest 3 headset

Meta is rolling out the latest update for Meta Quest headsets. Among the new features is the ability to lie down while using a Quest 3.

Star Wars Outlaws gets a new trailer and a release date of August 30

Ubisoft just dropped another trailer for its upcoming open world Star Wars game. The new trailer focuses on the story for Star Wars Outlaws.

Acer launches two all-new 14-inch gaming laptops alongside updated 16-inch models

Acer’s midrange gaming laptop line has four new arrivals today following the company’s refresh of its flagship models at CES 2024. On Tuesday, the company unveiled a pair of new 14-inch entries alongside two refreshes of existing 16-inch models.

Starlink terminals are reportedly being used by Russian forces in Ukraine

Starlink internet terminals are reportedly being widely used in Ukraine by Russian forces. There’s a thriving black market for the devices which stretches beyond Ukraine into Sudan.

The Razer Stream Controller is down to its all-time low price

Amazon has discounted the Razer Stream Controller down to $200 — it's all-time low price.

Shure's MV7+ USB/XLR mic has a customizable LED panel and built-in audio tools

Shure updates its MV7 XLR and USB microphone with a host of new features for podcasters and streamers.

The Fallout TV series is coming to Prime Video one day earlier than expected

The Fallout TV series is hitting Prime Video earlier than expected. You'll be able to watch all eight episodes starting on April 10.

Apple's M2 MacBook Air drops to $849 at Amazon

Amazon is running a sale on Apple's 2022 M2 Macbook Air, bringing the device down from $999 to $849 — an all-time low price.

DJI's RS4 gimbals make it easier to balance heavy cameras and accessories

The RS4 and RS4 Pro gimbals aren't groundbreaking but come with numerous small improvements over the previous RS3 models.

Indie Lovecraftian fishing game Dredge is gonna be a movie

Dredge is going to be a movie.

It's the last day to get up to 42 percent off annual Max subscriptions

This is your last day to snag a decent deal on a subscription to Max. Annual subscriptions are up to 42 percent off, depending on the tier.

Google announces Axion, its first Arm-based CPU for data centers

Google has announced Axion, its first Arm-based CPU for data centers.

Google Gemini chatbots are coming to a customer service interaction near you

At the ongoing Google Cloud Next conference in Las Vegas, the company has revealed the Gemini-powered chatbots its partners are working on, some of which you could end up interacting with.

Google's new AI video generator is more HR than Hollywood

Google Vids is not a replacement for AI-powered video generation tools like OpenAI's Sora. Instead, it uses stock footage and personal documents and media to spit out videos that office workers would be proud of.

The Morning After: Tesla settles lawsuit over fatal Model X crash

The biggest news stories this morning: Google’s long-awaited Find My Device network launches today, Nintendo’s Wii U and 3DS online servers are gone, Play Tekken, get free Chipotle.

JavaScript seems to be disabled in your browser. You must have JavaScript enabled in your browser to utilize the functionality of this website.

• My Wishlist
• Customer Login / Registration

FB Twitter linked in Youtube G+

• ORGANIZATIONAL BEHAVIOR
• MARKETING MANAGEMENT
• STATISTICS FOR MANAGEMENT
• HUMAN RESOURCE MANAGEMENT
• STRATEGIC MANAGEMENT
• OPERATIONS MANAGEMENT
• MANAGERIAL ECONOMICS
• FINANCIAL MANAGEMENT
• CONSUMER BEHAVIOR
• BRAND MANAGEMENT
• MARKETING RESEARCH
• SUPPLY CHAIN MANAGEMENT
• ENTREPRENEURSHIP & STARTUPS
• CORPORATE SOCIAL RESPONSIBILITY
• INFORMATION TECHNOLOGY
• BANKING & FINANCIAL SERVICES
• CUSTOMER RELATIONSHIP MANAGEMENT
• ADVERTISING
• BUSINESS ANALYTICS
• BUSINESS ETHICS
• DIGITAL MARKETING
• HEALTHCARE MANAGEMENT
• SALES AND DISTRIBUTION MANAGEMENT
• FAMILY BUSINESS
• MEDIA AND ENTERTAINMENT
• CORPORATE CASES
• Case Debate
• Course Case Maps
• Sample Case Studies
• IIM KOZHIKODE
• VINOD GUPTA SCHOOL OF MANAGEMENT, IIT KHARAGPUR
• GSMC - IIM RAIPUR
• IMT GHAZIABAD
• INSTITUTE OF PUBLIC ENTERPRISE
• IBM Corp. & SAP SE
• Classroom Classics
• Free Products
• Case Workshops
• Home       

Microsoft Acquisition of Nokia: An Analysis from Strategic and Financial Perspective*

Case Preview

Microsoft acquisition of nokia: an analysis from strategic and financial perspective.

”We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution. With ongoing share growth and the synergies across marketing, branding and advertising, we expect this acquisition to be accretive to our adjusted earnings per share starting in FY15, and we see significant long-term revenue and profit opportunities for our shareholders.”

– Steve Ballmer, Microsoft’s CEO

“Building on our successful partnership, we can now bring together the best of Microsoft’s software engineering with the best of Nokia’s product engineering, award-winning design, and global sales, marketing and manufacturing, with this combination of talented people, we have the opportunity to accelerate the current momentum and cutting-edge innovation of both our smart devices and mobile phone products.”

– Stephen Elop, Nokia’s CEO

“Microsoft will record a charge in the fourth quarter of fiscal 2015 for the impairment of assets and goodwill in its Phone Hardware segment, related to the Nokia Devices and Service business.”

On 3 rd September 2013, Microsoft Corporation (NASDAQ:MSFT) and Nokia Corporation (HEL:NOKIA) entered into a joint venture (JV), whereby Microsoft Corporation (Microsoft) acquired all of the Device and Service business of Nokia Corporation (Nokia) through an all-cash deal. The Microsoft-Nokia JV was the 2 nd largest merger in the history of Microsoft after the acquisition of Skype Technologies, the VOIP innovators, for $9.2 billion...................

An Overview of Nokia

The Finnish company “Nokia” began its operation in 1865 as a single paper mill at Tammerkoski Rapids in south-western Finland. Over the years, Nokia has nurtured success in several sectors including paper products, rubber boots and tiers, cable, mobile devices and telecommunications infrastructure equipment. Nokia entered the Device and Telecommunication industry with the motto of “connecting people” through its cutting edge technology. As early as 1980, Nokia became a household name around the world with the launch of Nordic Mobile Telephone (NMT), world’s first international cellular network with international roaming supported. The Nokia brand emerged as an undisputed leader in the mobile phone industry due the reliability, easy usage, higher resale value and durability of the devices.............

Insights into Nokia

Nokia was one of the largest manufacturers of mobile phones with world-acclaimed strategy and brand name. Nokia invested almost 14% of its revenue in Research and Development as a fundamental component of competitive advantage and sustainability. However, the company’s landscape began to change gradually post-2008. Nokia’s premier product lines were based on “Symbian”, an Operating System (OS) which was considered obsolete as compared to the modern counterparts such as iPhone OS (iOS) and Android. Apart from the technical limitations, Symbian OS prevented people or companies unrelated to the mobile manufacturing...........

An Overview of Microsoft

Microsoft is the world’s leading producer of computer software and is considered to be one of the most valuable brands in the world by Forbes magazine. Microsoft was incorporated in 1981, but it came into existence in 1975 when founder Bill Gates and Paul Allen saw an opportunity in operating system after the launch of Altair 8800 (microcomputer) by an American electronics company known as Micro Instrumentation Telemetry Systems (MITS)..............

Insight into Microsoft

Microsoft is a unicorn in the office productivity software and desktop operating system. The Windows OS itself has a total market share of about 88%, which includes Windows XP/Vista/7/8 and 10. This shows how predominant Microsoft is. Microsoft has become a household name across nations. Its brand awareness is extremely high..............

Global Smartphone Market

According to Gartner, the year 2013 saw a record sale of smartphones, 968 million units were sold, a whopping 42.3% increase from 2012 (Exhibit II). The smartphone market was rising exponentially and every player wanted a piece of this cake. Many new Chinese players emerged in the market..........

Rationale of the deal

Microsoft acquisition of a part of Nokia’s business was a strategic alliance where both the companies would work strategically to achieve common goals. Microsoft had nil to limited experience in manufacturing physical smartphone and needed strong.........

Strategic expectations of Microsoft

What was the rationale behind Microsoft buying out Nokia’s handset and service division?

• Improving market share: Microsoft believed that the acquisition will help them accelerate its market share and profits in the phone market as millions of new users were waiting to buy a new smartphone. Before the acquisition, Nokia and Windows phone had more than 10% share in 9 markets and it was outselling Blackberry (then, a very popular company) in 34 different markets. Lumia phones had started gaining popularity and it believed that the imaging capabilities of Nokia could drive more success to them.......... • .............

Financial Expectations of Microsoft

• A much better profit per unit: Under the previous partnership, Microsoft was earning less than $10 per unit and this earning had to support the entire marketing investment and platform payment support. But after the acquisition, a gross margin of more than $40 was expected with a breakeven in 50 million smart devices. • ..................

Strategic Expectations of Nokia

Smartphone business reached a phase where the big players (Google and Apple) dominated the market with their strong ecosystems while the rest were either making losses or breaking even at best 26. At this juncture, Nokia had partnered with Microsoft. Leading business experts analyzed the rationale behind the deal from Nokia’s perspective.............

Financial Expectations of Nokia

• The ultimate objective of Nokia was to increase the revenue generation from Nokia’s mobile devices segment besides an increased market share under the global smartphone market. • .............

Reflections of the Acquisition

It is evident from Exhibit VI that Microsoft financials showed a steep decline. A write-off of $7.5 billion of goodwill and asset impairment charges related to phone hardware and $2.5 billion of integration and restructuring expenses, primarily costs associated with Microsoft’s restructuring plans, which affected the overall business of Microsoft...........

The Way Forward

The recent 18,000 job cuts (12,500 from Nokia), restructuring charges of $960 million and impairment charges of $7.6 billion to Nokia Device segment by Microsoft gives a clear indication that the Microsoft acquisition of Nokia was a clear blunder. The prime reason behind such strategic collaboration is for the shared synergistic benefits derived by participating organizations.................

Exhibit I: Operating Systems and their Market Shares in 2009 and 2010

Exhibit II: Worldwide Smartphone Sales to End Users by Vendor in 2013 (Thousands of Units)

Exhibit III: Worldwide Smartphone Sales to End Users by Operating System in 2013 (Thousands of Units)

Exhibit IV: Smartphones Revenue Predictions/Opportunity

Exhibit V: NPV Predictions by Microsoft

Exhibit VI: Comparative Analysis of Financial Parameters

Teaching Note Preview

The case set in 2014, depicts the dynamics of multinational business ecosystem with US tech giant Microsoft Corporation (MSFT), aspiring to be the leader in the Services and Devices industry, by acquiring the handset business of Nokia Corporation (HEL: NOKIA). The case study, through minute detailing and multi-dimensional market analysis, will help the students understand the implications of the deal from the strategic and financial perspective.

The Global Smartphone Industry is highly competitive with ever-changing technological landscape. The business strategies of the companies are evolving to cater the emerging global smartphone market. Multiple companies globally consider merger and acquisitions as the best strategic tool for effective growth and shareholder’s wealth maximization. The analysis of the case using tools and techniques such as SWOT, PESTEL, Porter’s Five Forces Model, etc. will provide analytical reasoning for strategic intent of the acquisition. To understand the financial impact, the comparative analysis of the financial parameters such as Return on Total Assets, Return on Capital Employed, Return on Equity, Gross Profit Margin, Net Profit Margin, Debt to Equity Ratio and value of the companies pre- and post-merger can be adopted and the impact of the financial ratios on the balance sheet and visa-versa can be discussed. The case can be used to analyze and highlight the acquisition strategy form the strategic fit perspective, the benefits/advantages envisaged by both the companies.

In order to enrich the understanding of the students and develop logical approach for solving complex case studies, mergers & acquisition of other companies in the same decade could be studied and inferences could be drawn for case comparison. The students can come up with their own version of strategies and their financial impact under such scenarios...............

US tech giant Microsoft Corporation (NASDAQ:MSFT), in 2014 announced its acquisition of the Finnish communication company – Nokia Corporation’s (HEL: NOKIA) handset division for $7.2 billion. Microsoft Corporation (Microsoft) aspired to be the leader in the services and devices industry. However, by July 2015, the profitability ratios for Microsoft such as Return on Assets (ROA), Return on Equity (ROE), Return on Invested Capital (ROIC), Gross Profit Margin (GPM), Net Profit Margin (NPM) have shown a decline from 2014 to 2015. Besides, EPS figure has also declined from 2014 to 2015.

The objective of this case study is to understand the implications of the deal from the Strategic and Financial perspective. To highlight the financial impact, the case presents a comparative analysis of the financial parameters such as ROA, ROCE, ROE, GPM, NPM, Debt to Equity (D/E) Ratio, pre and post-merger valuations of the companies, etc. The case analyzes and highlights the acquisition strategy from the strategic fit perspective as well as the benefits/advantages envisaged by both the companies.

Pedagogical Objectives

• To understand the concept of M&A and its implications on strategy, technology, marketing, and financial intents, IP acquisition and licenses
• To understand the role of PESTEL factors and SWOT analysis in strategic decision making
• To understand financial implications of the strategy on a business by discussing financial parameters such as ROA, ROCE, ROE, GPM, NPM, D/E, EPS etc.

Case Positing and Setting MBA Program – Mergers and Acquisitions course – To understand certain concepts of Finance and Strategy

* FLAME INTERNATIONAL CASE CONFERENCE 2016

** Electronic downloadable links (PDFs, PPTs, Supplements etc.) are available immediately after purchase. Please use Indian Currency Option (INR) when you are Making Payment within India. "No. of Copies" reflects the number of permissions you intend to use in Classroom Discussions / Corporate Trainings.

• Add to Wishlist
• | Add to Compare
• | Email to a Friend

Related products

Request for an Inspection Copy

(strictly for review purpose, not to be used for classroom discussion/trainings ).

• Name of the Faculty/Executive *
• Business School/University/Company *
• Product Description

Additional Information

• Copyright Permissions

 © etcases.com. All Rights Reserved.

Information

• Collaborations
• Privacy Policy
• Terms & Conditions
• Case Format
• Pricing and Discount
• Subscription Model
• Case Writing Workshop
• Case Submission
• Reprint Permissions

CUSTOMER SERVICE

Phone: +91 9626264881

Email:  [email protected]

ET CASES develops customized case studies for corporate organizations / government and non-government institutions. Once the query  is generated, one of ET CASES’ Case Research Managers will undertake primary/secondary research and develop the case study. Please send an e-mail to [email protected] to place a query or get in touch with us.

Don’t miss out!

Be the first to hear about new cases, special promotions and more – just pop your email in the box below.

Microsoft completes its acquisition of Nokia

As previously reported , today marks the day when Nokia and Microsoft ceased being two parties with similar goals evolved around Windows Phone. Both companies have fired out press releases detailing the finalization of the deal seeing Microsoft absorb the phone business from Nokia.

From today, Nokia will be formed of HERE, Nokia Solutions & Networks, as well as further developments. The handset side of Nokia will now be part of Microsoft. Nokia's Devices and Services unit has been sold to Microsoft for €5.44 billion (US$7.3 billion) and will be renamed as Microsoft Mobile Oy. Stephen Elop, pictured above with Microsoft CEO Satya Nadella, will move to Microsoft to lead the hardware division.

Check out the Microsoft press release below.

Source: Microsoft , Nokia

Microsoft Corp. announced it has completed its acquisition of the Nokia Devices and Services business.

The acquisition has been approved by Nokia shareholders and by governmental regulatory agencies around the world. The completion of the acquisition marks the first step in bringing these two organizations together as one team.

"Today we welcome the Nokia Devices and Services business to our family. The mobile capabilities and assets they bring will advance our transformation," said Microsoft CEO Satya Nadella. "Together with our partners, we remain focused on delivering innovation more rapidly in our mobile-first, cloud-first world."

Reporting to Nadella is former Nokia President and CEO Stephen Elop, who will serve as executive vice president of the Microsoft Devices Group, overseeing an expanded devices business that includes Lumia smartphones and tablets, Nokia mobile phones, Xbox hardware, Surface, Perceptive Pixel (PPI) products, and accessories. Microsoft welcomes personnel with deep industry experience in more than 130 sites across 50 countries worldwide, including several factories that design, develop, manufacture, market and sell a broad portfolio of innovative smart devices, mobile phones and services. As part of the transaction, Microsoft will honor all existing Nokia customer warranties for existing devices, beginning April 25, 2014.

Get the Windows Central Newsletter

All the latest news, reviews, and guides for Windows and Xbox diehards.

Windows Phone is the fastest-growing ecosystem in the smartphone market, and its portfolio of award-winning devices continues to expand. In the fourth quarter of 2013, according to IDC, Windows Phone reinforced its position as a top three smartphone operating system and was the fastest-growing platform among the leading operating systems with 91 percent year-over-year gain.1 Furthermore, with the Nokia mobile phone business, Microsoft will target the affordable mobile devices market, a $50 billion annual opportunity,2 delivering the first mobile experience to the next billion people while introducing Microsoft services to new customers around the world.

Microsoft will continue to deliver new value and opportunity, and it will work closely with a range of hardware partners, developers, operators, distributors and retailers, providing platforms, tools, applications and services that enable them to make exceptional devices. With a deeper understanding of hardware and software working as one, the company will strengthen and grow demand for Windows devices overall.

As with any multinational agreement of this size, scale and complexity, Microsoft and Nokia have made adjustments to the deal throughout the close preparation process. As announced previously, Microsoft will not acquire the factory in Masan, South Korea, and the factory in Chennai, India, will stay with Nokia due to the tax liens on Nokia's assets in India that prevent transfer. As a result, Microsoft will welcome approximately 25,000 transferring employees from around the world.

More information about Microsoft's expanded family of devices and services is available here.

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft refers to Microsoft Corp. and its affiliates, including Microsoft Mobile Oy, a subsidiary of Microsoft. Microsoft Mobile Oy develops, manufactures and distributes Lumia, Asha and Nokia X mobile phones and other devices.

For further information regarding risks and uncertainties associated with Microsoft's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of Microsoft's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft's Investor Relations department at (800) 285-7772 or at Microsoft's Investor Relations website.

All information in this release is as of April 25, 2014. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

Rich Edmonds was formerly a Senior Editor of PC hardware at Windows Central, covering everything related to PC components and NAS. He's been involved in technology for more than a decade and knows a thing or two about the magic inside a PC chassis. You can follow him on Twitter at @RichEdmonds .

• 2 "It's like the gold rush. But it's probably going to come down in a couple of years, and then we'll just be refining the experience." AMD Senior Manager talks AI PCs and NPUs
• 3 One of last year's best PC games just came to Steam, and it's cheaper than a cup of coffee
• 4 Microsoft is facing an investigation by a South African antitrust watchdog for alleged "anti-competitive" practices in its cloud computing business.
• 5 Minecraft: Bedrock Edition finally gets a feature PC players have had for over a decade

Product details

Weekly news and teardowns on trending startup companies

The most relevant Twitter threads of the week

Product of the week brought to you by ProductHunt

Detailed stats on the companies that raised venture capital

• Company Forensics

Why Microsoft acquired Nokia (and then sold it)

Nokia is a Finnish multinational corporation that goes all the way back to the nineteenth century and started with wood mills that produced mainly paper. Yes, the same Nokia that a hundred years later created cultural icons like the 1110 phone model a lot of you probably rocked at some point, back in the early 2000s. It became a mainstay in mobile phones for some years, and it was interesting enough for Microsoft, who bought Nokia. The story, however, is much more complicated than that.

Nokia was an icon in mobile phones

If you’re older than 20, you most definitely know Nokia for leading the telecommunications market back in the early years of cellular phones, producing some of the first commercially successful handsets that sold hundreds of millions of devices and lead the industry for more than ten years straight, paving the way for the rise of companies like BlackBerry or Motorola. 

But all that was only the beginning of the mobile phone era and a few years into the 21st century came smartphones. Surprisingly, after the first decade of this new millennium, Nokia found itself fighting to keep up with the web 2.0 environment, the deadly competition of the iPhone and the swift development of Android. 

Unbelievable as it seemed then, Nokia sales started plummeting after mainly going only up. So, after having been making business for a few years with them, in 2014 Microsoft stepped in and acquired all Nokia mobile phone operations for no less than €3.79B, plus another €1.65 billion to license its portfolio of patents. It was kind of a lifesaver for Nokia but it was also Microsoft’s big bet on entering the feature phone game, to deliver both software and hardware. 

The challenge was a huge puzzle for Microsoft and it needed to be figured out quickly, as the competition of iOS and Android became ruthless.

Yeah, the glory of Nokia and the roaring success from old times had just vanished and things continued going south to the point where Microsoft ended up re-selling Nokia’s phone operations to HMD, again a Finnish subsidiary of the giant Foxconn Technology Group, in 2016.

So, despite still being alive, Nokia as a phone brand is not even the shadow of what it once was and the kingdom they built when they put cell phones in everyone’s hands, is just gone for good. 

How Nokia started

Let’s get nostalgic now. Nokia was born in Finland, in 1865, so it has lived over the transition of two centuries. Yes, it was during the final years of the industrial revolution when Nokia was created by Frederik Idestam and Leo Mechelin, two owners of wood mills in the Finnish towns of Tampere first and later in Nokia, a town named after the Nokianvirta river. 

The two businessmen decided to partner up and created a shared good, named the Nokia Company. By the end of the nineteenth century, they decided to step into the electricity generation business but just then came the first World War. By the end of it in 1918, Nokia was struggling to survive. No surprise there... But then it formed a partnership with the Finnish Rubber Works and the Cable Factory, all companies based in these Finnish lands.

Later in 1967, the three companies merged into what we know as the Nokia Corporation, after having been manufacturing electronics from cables to radio communicators, computers, and many other products like rubber boots or respirators. It was in the early 70s that they started getting into the network and telephone industry. 

The spirit of merging was in Nokia’s DNA and in the following years they acquired a series of companies, including several of the main television manufacturers from Finland, Sweden, and Germany, turning into the third-largest TV maker company. Similar story with radio communicators, that they even manufactured for the army along with other products.

These acquisitions and mergers were considered a significant shift in Nokia’s business and were mostly orchestrated by Kari Kairamo, the Finnish CEO that arrived in 1977 and that sadly committed suicide ten years later, by the time the company’s revenue base was hitting 3B. Under his administration, Kairamo executed several acquisitions that increased the company’s portfolio in the modern market. One of the companies they acquired was Mobira, an early cellular phone manufacturer that ended up being the foundation of Nokia’s future business in telephony. 

In 1981, Mobira launched the Nordic Mobile Telephone or NMT, as a solution to the increasing demand and saturation of the old manual phone networks, and it was the first one to allow international roaming. The network was opened in 1981 in Sweden and Norway, and soon in more countries like Denmark, Finland, and Iceland.  

But it was the Mobira Cityman 900 that really started Nokia’s race for fully mobile phones, being way smaller and lighter than the Senator, although it had a very high price tag at the beginning. Nokia had been winning from Finland’s open trade with Russia, and the Cityman 900 phone model became iconic after the Soviet Union president Mikhail Gorbachev used it to make a call from Helsinki to Moscow during a press conference in October 1987. Yes, with the Cold War at its peak, Nokia is reported to have managed successful business with both Russians and Americans. That’s how big it was. 

Nokia created a wide catalog of devices

Let’s keep the nostalgic vibe and remember some of the most popular Nokia phones that have a rightful place in the history books and in the memory of those in their mid-late twenties or more. But before that, we need to say that the amount of phone models in Nokia’s catalog over the years is ridiculous and there are many series and models that were successful. 

Sure, most of them are discontinued today, but still going through the full list can be stunning. Let’s remember some of the most iconic ones.

They also experimented with all-in-one type models that may have very well been the first approach to smart devices. The Nokia 900 Communicator from 1996 was a mini-laptop looking device that could do fax, email, spreadsheets and some other stuff. It wasn’t necessarily a commercial success, but it’s worth mentioning as one of their first attempts to have phones do more than calls and messaging. 

That first Communicator seems to have been the one that brought Microsoft’s attention in. Nokia executives at that time tell that a Microsoft recon team brought Bill Gates himself to see the device and have a demo of it, in a big tech conference in Las Vegas. Microsoft reportedly bought a good amount of them and this started a business relationship that would end up being critical.

Later in 1998, came yet another commercial hit and the first to successfully introduce the idea of gaming on a phone. Yes, the first one to feature the Snake game in it: the Nokia 6100. It’s very likely that you or someone you know had one of these in the early 2000s. In a way, Nokia can be remembered as the phone of the people, as they always delivered great durability and value for accessible bucks; whereas brands like Blackberry pursued a more sophisticated, executive audience. 

Nokia entered the 21st century still as the undisputed king of cell phones, having surpassed the 100th million manufactured phones in 1998. In that year alone, they had a sales revenue of $20 billion making $2.6 billion profit. By 2000 it employed over 55,000 people around 140 countries and had a market share of 30% in the mobile phone market, almost twice as large as its nearest competitor, Motorola. 

Before Microsoft acquired Nokia, the giant was already struggling

But just then, the first decade of the new millennium brought a real game-changer: in 2007, the iPhone was released to the world, quickly setting a new industry standard. Just switching from keyboards to an all-touchscreen the way Apple did it back then, was revolutionary, and with the implementation of iPhone OS, there was no doubt that Apple had defined a new era. 

The iPhone almost instantly dethroned Nokia and any other runner-ups. The director of user experience management at Nokia during that time has reported himself to have been explicitly tasked with creating an “iPhone killer” for the next year. Yeah, imagine being charged with that… So, shipments of iPhones were received and analyzed in Nokia’s headquarters, but something was just off now. The iPhone may have been the drop that spilled the glass.

Several former Nokia executives have shared their thoughts on the overwhelming transformation that the company went through with the overflowing success of their phones. Cause let’s remember the Nokia foundations from those wood mills and rubber factories and how its culture pretty much came from those humble days. Former employees have testified how all the crazy success and the tons of money that came through the years impacted on Nokia’s cultural foundations and principles. 

There are many testimonials of this and even one curious story to illustrate it, told by the former head of development and senior vice president from the 90s themselves. Yeah, whenever they had a problem or needed to solve a complex issue, management would climb up the top of their building to meet, just not in your regular meeting room but in saunas, surrounded by a spectacular rooftop view that helped ideas flow, according to them. It sounds extravagant, but if you think about it, it’s a very personal approach to problem-solving, maybe a little too personal, but ultimately an expression of trust.

With the outrageous growth came a new lineage of executives and managers that didn’t have time for any of that, as the company seemed to have become a monster hungry for more success and more money at all costs. The internal competition within the teams and divisions became ferocious and different management styles were confronted in what former employees have called a madhouse. 

Also, the killer competition didn’t stop with the iPhone. In 2008, the Google recently acquired Android mobile OS, was featured for the first time commercially in the HTC Dream phone.  

We all pretty much know how the story went from there: Android became the main mobile operating system on virtually every phone that is not an iPhone. Big manufacturers like Samsung or even Huawei raised through Android and claimed their rightful place in the Market too. 

Who Bought Nokia?

Cut to - the end of 2013, Microsoft announces the acquisition of all Nokia phone operations for more than 5B euros. It was Microsoft’s move to take part in the mobile market after having underestimated it and focused mainly only on its PC business. It was an ambitious bet and a bigger challenge for Microsoft. 

The dimension and complexity of the acquisition were such, that the deal was several months overdue after its announcement, due to legal and administrative challenges that involved manufacturing facilities in Asia, along with a mix of licenses and operating systems. By the time the deal was closed, some financials had of course changed and Nokia ended up receiving something around the 7B euros.

Nokia also had to remain in charge of operations in Korea and India, due to tax-related legal constraints, but they would manufacture for Microsoft and all phones would now be Microsoft branded. 

It was just the beginning of the massive puzzle that Microsoft had got itself into. For a reference, by 2013, Nokia sold nearly 251 million handsets, a mixture of feature phones and smartphones.

The Lumia lineup of Windows Phones only accounted for 30 million and Microsoft had to plan how to handle the other 220 million other devices that Nokia produced not on Windows Phone. It was a big worldwide business in which Nokia was in second place behind Samsung, as the top mobile phone manufacturers. Microsoft was now the world's second-largest phone manufacturer by sales.

With the hardware muscle now, some argue that Microsoft’s right move should have been to make the Windows OS free in all their smartphones. Of course, that’s easier said than done and ultimately, Microsoft wasn’t successful in figuring out the licensing puzzle or inserting itself as a phone brand. But just thinking about it, free adoption of Windows Phone would’ve definitely placed more direct competition on Android. It would’ve given them the chance to control their own app store, push its own cloud-based services, and many other possibilities. 

But instead, the firm’s efforts to elbow into first-party hardware received a massive setback. Long story short, in 2015 Microsoft writes off $7.6 billion as a consequence of the Nokia acquisition and lays off 7,800 employees and a roughly $800 million restructuring charge, writing down the vast majority of the phone business purchase price.

In 2016, Microsoft Mobile announced the sale of its feature phone business to the Finnish HMD Global and FIH Mobile. The sale included design rights and its rights to use the Nokia brand on all types of mobile phones and tablets worldwide until 2024. The total sale to both HMD Global and FIH Mobile amounted to US$350 million.

After Microsoft acquired Nokia, what happened to it? 

In this new stage, back again in Finnish hands, Nokia seems to have been recovering some of its roots and it now produces straight forward devices for the mid-lower end of the market. However, it’s been diminished to almost being unknown for the new generations. 

So, that’s how a company that once was reigned over the mobile phone industry became a runner-up and ended up maneuvering just to keep its head up. Now, if we learned something today, is that when a company reaches the global magnitude that Nokia reached, it’s virtually impossible for it to go down to the point of disappearing. Just think of something equivalent nowadays, like Samsung or Apple going out of business… it’s just hard to imagine, it would probably require a global calamity. 

But remember, we also learned that success can sometimes hit hard and shake a company’s foundations just as much as a failure. Having a solid base and principles to stick to can end up being critical for a company’s endurance over time, regardless of its size.

Eduardo Saverin might not be a household name, but he helped created the world's biggest social network: Facebook.

The PayPal mafia has helped create thousands of startups, but how did this company come to exist? Here's its fascinating story

• Browse Topics
• Executive Committee
• Affiliated Faculty
• Harvard Negotiation Project
• Great Negotiator
• American Secretaries of State Project
• Awards, Grants, and Fellowships
• Negotiation Programs
• Mediation Programs
• One-Day Programs
• In-House Training and Custom Programs
• In-Person Programs
• Online Programs
• Advanced Materials Search
• Contact Information
• The Teaching Negotiation Resource Center Policies
• Frequently Asked Questions
• Negotiation Journal
• Harvard Negotiation Law Review
• Working Conference on AI, Technology, and Negotiation
• 40th Anniversary Symposium
• Free Reports and Program Guides

Free Videos

• Upcoming Events
• Past Events
• Event Series
• Our Mission
• Keyword Index

PON – Program on Negotiation at Harvard Law School - https://www.pon.harvard.edu

Team-Building Strategies: Building a Winning Team for Your Organization

Discover how to build a winning team and boost your business negotiation results in this free special report, Team Building Strategies for Your Organization, from Harvard Law School.

For Business Negotiators, Patience Can be a Virtue

The story of microsoft’s nokia acquisition makes a case for business negotiators staying at the table.

By PON Staff — on October 24th, 2023 / BATNA

Business negotiators know that persistence and tenacity can make all the difference between impasse and a game-changing breakthrough. Take the saga behind Microsoft’s 2013 announcement of its pending $7.2 billion acquisition of Finnish mobile phone company Nokia’s handset and services business. The two parties engaged in many months of fruitless talks before either side believed that an agreement was likely—yet a late-stage brainstorming session brought them together. We analyze the negotiations with an eye toward identifying why things suddenly went right after so much had gone wrong.

Nokia builds its BATNA

Microsoft and Nokia had been partners since 2011, when the Finnish firm began installing Microsoft’s Windows Phone operating system (OS) on its smartphones. But the arrangement had been disappointing. Nokia was lagging far behind smartphone manufacturers Samsung and Apple in terms of innovation and market share, and the Windows Phone OS, used primarily on Nokia handsets, was failing to meet expectations as well.

Claim your FREE copy: BATNA Basics

Discover how to unleash your power at the bargaining table in this free special report, BATNA Basics: Boost Your Power at the Bargaining Table , from Harvard Law School.

In January 2013, Microsoft CEO Steven Ballmer made a quick phone call to Risto Siilasmaa, the chairman of Nokia’s board of directors, to raise the possibility of Microsoft buying divisions of Nokia. The following month, the two men sat down at a wireless-industry conference in Barcelona, Spain, to discuss the idea further. The two leaders agreed that inefficiencies existed in their current agreement, including duplicate engineering, marketing, and advertising efforts. Then they brainstormed solutions ranging from minor tweaks to their current deal to more extensive collaborations and business mergers, reports Ina Fried on the technology news website AllThingsD.com.

Nokia narrowed in on two possible options. First, it could sell its underperforming handset business to Microsoft or another company and focus on its telecommunications equipment, mapping, and patent businesses. Second, it could let its deal with Microsoft lapse at the end of 2014 and try to revive its handset business by adapting its smartphones to Google’s Android system. In fact, Nokia informed Microsoft that one of its teams already had Android up and running on Nokia’s Lumia handsets. By cultivating this strong BATNA , or best alternative to a negotiated agreement , Nokia gained the power to walk away from a subpar offer from Microsoft.

Early stumbles between business negotiators

In fact, Nokia executives did just that—turned down a disappointing proposal—immediately after listening to Microsoft’s first formal pitch for an acquisition at an April 2013 meeting in New York. Siilasmaa and his team informed Ballmer and his team that they were too far apart on price and other key issues, such as which company would own Here, Nokia’s mapping service. The Nokia executives believed strongly that they needed to hold on to Here and their ability to sell the software to other companies. Meanwhile, Microsoft felt it couldn’t keep pace with competitors without controlling the mapping technology it was using in its phones, tablets, and PCs and on the web, according to AllThingsD.com.

The next month, a meeting between the two teams in the London office of Microsoft’s law firm also flopped, and not just because Ballmer tripped over a glass coffee table and cut his forehead in the middle of it. (The injury turned out to be minor.) A follow-up meeting at a Nokia-owned mansion in Finland the following month was aborted after four hours because of lack of progress, according to the New York Times .

A deal takes shape

A breakthrough came when Nokia informed Microsoft that it would proceed with formal talks only if Microsoft agreed to abide by certain preconditions, most notably a commitment to set up a financing source for Nokia and the caveat that Here was off the table.

Microsoft agreed. The parties met in early July 2013 in New York, where in the course of discussion they happened upon a solution to the question of who would control the mapping service. Why not share the code, with Nokia retaining intellectual-property rights to Here? Nokia realized that it could grant Microsoft a license to access and customize Here’s source code and own any improvements it made. Nokia would retain ownership of Here and the power to license the service to other companies.

At the end of a weekend of talks, Ballmer and Siilasmaa shook hands on the rough outlines of an agreement, which was filled out over the next two months. As part of the deal, 32,000 Nokia employees, including CEO Stephen Elop, would be hired by Microsoft. A former Microsoft executive, Elop was considered a likely successor to Ballmer, who announced plans to retire within a year.

Lessons learned

The Microsoft-Nokia deal offers several useful takeaways for business negotiators:

■ Don’t jump the gun on price. In its initial presentation, Microsoft lost Nokia’s interest by making a price offer that the Finnish firm considered far too low. Microsoft may have erred by raising the issue of price before it understood key aspects of Nokia’s business and its interests in a potential sale. For this reason and others, it often makes sense to hold off on making concrete price offers until later in a negotiation, after you have engaged in thorough fact-finding. ■ Be open about your BATNA. Nokia not only cultivated a strong alternative to a deal with Microsoft—the capability to jump ship from Windows Phone to Android technology—but also shared this confidential development with Microsoft. A strong BATNA brings with it negotiating power, especially when the other side knows that you could easily walk away. ■ Keep talking. The parties could have gone their separate ways after their first meeting. Instead, each assigned teams to explore issues and tradeoffs they may have overlooked or undervalued. The two sides continued to meet despite a series of deadlocked talks—and eventually reached a point where they could brainstorm creative deal terms .

Setting negotiating conditions: A risky move

Interestingly, it was only after Nokia laid out conditions to future discussions with Microsoft—financing commitments and taking Nokia’s mapping service off the table—that the negotiating teams were able to reach agreement.

Insisting that the other party agree to certain terms as a precondition to negotiation is a common but risky tactic. For example, in the Minnesota Orchestra’s l abor dispute, for example, the players said for many months that they would negotiate with management only after the lockout ended. But management was loath to accept this condition, aware that the players would have little motivation to accept significant salary cuts if they were performing and being paid.

As the failure of this condition illustrates, setting conditions to negotiation is a potentially self-defeating strategy. Remember that your counterpart will weigh the costs and benefits of accepting your conditions against his alternatives away from the table. If you have a strong BATNA, as Nokia appears to have had, then it may make sense to take this risk. But note that even in this case, Microsoft was able to make inroads on the mapping service issue that Nokia had claimed was nonnegotiable. Microsoft may have saved the deal by refusing to assume that Nokia’s conditions to negotiation were nonnegotiable.

In general, the wisest course for business negotiators may be to agree to negotiate rather than stipulating potentially deal-breaking conditions. Then, at the table, seek tradeoffs that will help you gain leverage on the issues you value most, while demonstrating flexibility on your counterpart’s pressing concerns.

What is some advice you’d offer to other business negotiators?

Related Posts

• Negotiation Examples: How Crisis Negotiators Use Text Messaging
• For Sellers, The Anchoring Effects of a Hidden Price Can Offer Advantages
• BATNA Examples—and What You Can Learn from Them
• Taylor Swift: Negotiation Mastermind?
• Power and Negotiation: Advice on First Offers

Click here to cancel reply.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Negotiation and Leadership

• Learn More about Negotiation and Leadership

NEGOTIATION MASTER CLASS

• Learn More about Harvard Negotiation Master Class

Negotiation Essentials Online

• Learn More about Negotiation Essentials Online

Beyond the Back Table: Working with People and Organizations to Get to Yes

• Learn More about Beyond the Back Table

Select Your Free Special Report

• Beyond the Back Table September 2024 and February 2025 Program Guide
• Negotiation and Leadership Fall 2024 Program Guide
• Negotiation Essentials Online (NEO) Spring 2024 Program Guide
• Negotiation Master Class May 2024 Program Guide
• Negotiation and Leadership Spring 2024 Program Guide
• Make the Most of Online Negotiations
• Managing Multiparty Negotiations
• Getting the Deal Done
• Salary Negotiation: How to Negotiate Salary: Learn the Best Techniques to Help You Manage the Most Difficult Salary Negotiations and What You Need to Know When Asking for a Raise
• Overcoming Cultural Barriers in Negotiation: Cross Cultural Communication Techniques and Negotiation Skills From International Business and Diplomacy

Teaching Negotiation Resource Center

• Teaching Materials and Publications

Stay Connected to PON

Preparing for negotiation.

Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. In this video, Professor Guhan Subramanian discusses a real world example of how seating arrangements can influence a negotiator’s success. This discussion was held at the 3 day executive education workshop for senior executives at the Program on Negotiation at Harvard Law School.

Guhan Subramanian is the Professor of Law and Business at the Harvard Law School and Professor of Business Law at the Harvard Business School.

Articles & Insights

• Sales Negotiation Techniques
• M&A Negotiation Strategy: Missed Opportunities in Musk’s Twitter Deal
• How to Negotiate in Good Faith
• How to Deal with Cultural Differences in Negotiation
• Dear Negotiation Coach: Coping with a Change-of-Control Provision
• Value Conflict: What It Is and How to Resolve It
• Advanced Negotiation Strategies and Concepts: Hostage Negotiation Tips for Business Negotiators
• Negotiating the Good Friday Agreement
• Communication and Conflict Management: Responding to Tough Questions
• How to Maintain Your Power While Engaging in Conflict Resolution
• Famous Negotiations Cases – NBA and the Power of Deadlines at the Bargaining Table
• Negotiating Change During the Covid-19 Pandemic
• AI Negotiation in the News
• Crisis Communication Examples: What’s So Funny?
• Crisis Negotiation Skills: The Hostage Negotiator’s Drill
• Bargaining in Bad Faith: Dealing with “False Negotiators”
• Managing Difficult Employees, and Those Who Just Seem Difficult
• How to Deal with Difficult Customers
• Negotiating with Difficult Personalities and “Dark” Personality Traits
• Consensus-Building Techniques
• The Winner’s Curse: Avoid This Common Trap in Auctions
• Understanding Exclusive Negotiation Periods in Business Negotiations
• Perspective Taking and Empathy in Business Negotiations
• Dealmaking and the Anchoring Effect in Negotiations
• Negotiating Skills: Learn How to Build Trust at the Negotiation Table
• What is Alternative Dispute Resolution?
• Alternative Dispute Resolution Examples: Restorative Justice
• Choose the Right Dispute Resolution Process
• Union Strikes and Dispute Resolution Strategies
• What Is an Umbrella Agreement?
• The Pros and Cons of Back-Channel Negotiations
• Overcoming Cultural Barriers in Negotiations and the Importance of Communication in International Business Deals
• Managing Cultural Differences in Negotiation
• Top 10 International Business Negotiation Case Studies
• Hard Bargaining in Negotiation
• How an Authoritarian Leadership Style Blocks Effective Negotiation
• Paternalistic Leadership: Beyond Authoritarianism
• Advantages and Disadvantages of Leadership Styles: Uncovering Bias and Generating Mutual Gains
• The Contingency Theory of Leadership: A Focus on Fit
• Servant Leadership and Warren Buffett’s Giving Pledge
• Alternative Dispute Resolution (ADR) Training: Mediation Curriculum
• What Makes a Good Mediator?
• Why is Negotiation Important: Mediation in Transactional Negotiations
• The Mediation Process and Dispute Resolution
• Negotiations and Logrolling: Discover Opportunities to Generate Mutual Gains
• Negotiation Techniques To Get New Business Partnerships Off on the Right Foot
• Daniel Kahneman Showed Negotiators a More Rational Path
• Why Negotiations Fail
• Five Fundamentals of Negotiation from Great Negotiator Tommy Koh
• Finding Mutual Gains In “Non-Negotiation”
• Negotiation Journal celebrates 40th anniversary, new publisher, and diamond open access in 2024
• Ethics and Negotiation: 5 Principles of Negotiation to Boost Your Bargaining Skills in Business Situations
• 10 Negotiation Training Skills Every Organization Needs
• Trust in Negotiation: Does Gender Matter?
• Use a Negotiation Preparation Worksheet for Continuous Improvement
• How to Negotiate Pay in an Interview
• How to Negotiate a Higher Salary
• Renegotiate Salary to Your Advantage
• How to Counter a Job Offer: Avoid Common Mistakes
• Salary Negotiation: How to Ask for a Higher Salary
• New Simulation: International Business Acquisition Negotiated Online
• Teach Your Students to Take Their Mediation Skills to the Next Level
• Check Out Videos from the PON 40th Anniversary Symposium
• Check Out the All-In-One Curriculum Packages!
• Teach Your Students to Negotiate Cross-Border Water Conflicts
• How to Negotiate Mutually Beneficial Noncompete Agreements
• What is a Win-Win Negotiation?
• How to Win at Win-Win Negotiation
• Labor Negotiation Strategies
• How to Create Win-Win Situations

PON Publications

• Negotiation Data Repository (NDR)
• New Frontiers, New Roleplays: Next Generation Teaching and Training
• Negotiating Transboundary Water Agreements
• Learning from Practice to Teach for Practice—Reflections From a Novel Training Series for International Climate Negotiators
• Insights From PON’s Great Negotiators and the American Secretaries of State Program
• Gender and Privilege in Negotiation

Remember Me This setting should only be used on your home or work computer.

Lost your password? Create a new password of your choice.

Copyright © 2024 Negotiation Daily. All rights reserved.

Microsoft-Nokia culture clash will be tough to overcome

Professor of Organisational Behaviour, Cass Business School, City, University of London

Disclosure statement

Andre Spicer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

City, University of London provides funding as a founding partner of The Conversation UK.

View all partners

Among Western nations it would be difficult to find two cultures as different as the US and Finland. Americans are stereotypically confident and outgoing; Finns considerably more reserved. This is even reflected in the economies of the two nations: the US is the home of free-market capitalism; Finland is the poster-child of European social democracy.

These are just stereotypes, of course, but they do give you a hint of some of the real challenges that Microsoft is likely to face as it seeks to integrate Nokia’s mobile phone division, which it has purchased for €5.4 billion .

The purchase was announced with great fanfare by both Microsoft and Nokia senior management. For Nokia, the deal is seen as a way to exit from the handset market. Although they once dominated this sector, they are now well behind market leaders Apple and Samsung. For Microsoft, the purchase is a way for them to add a mobile hardware component that will allow them to compete head to head with Apple and Google.

Although the rhetoric around the deal sounds good, the reality is likely to be much messier. The research suggests that most mergers and acquisitions tend to destroy rather than create value.

Indeed, the history of Microsoft during the past decade has served as a remarkable case study of this basic rule. When outgoing CEO, Steve Ballmer, took over in 2000 it was absolutely dominant in its field and its share price was at an all-time high. During Ballmer’s tenure we have seen a stream of acquisitions, uncertain innovation and a stagnation of its shareprice. A New Yorker journalist recently quipped that Ballmer had finally figured out a way to make some money – he quit .

Maybe the acquisition of Nokia should be seen not as a shrewd strategic move, but more like one of the last great acts of the Ballmer regime. Indeed, research suggests that CEOs tend to become addicted to mergers and acquisitions , despite their declining returns.

The hubris of CEOs plays a big role here. Feelings of greatness often lead then to paint a rosy future picture of takeovers. They are also likely to overlook the significant risks that come with any acquisitions. This is all depressing news for Microsoft shareholders – if the research in the area is anything to go by, they are unlikely to see any significant gains from the acquisition of Nokia. In fact, they are actually likely to lose out.

But shareholders are not the only ones who will lose out. The future is likely to be relatively grim for employees in the Nokia phones division. There have already been reports in the Finnish press that many are worried about losing their jobs . This comes on the heels of a stream of layoffs in recent years.

But even for those who hold on to their jobs, life under the Microsoft regime is likely to be difficult. Merging cultures following an acquisition often proves to be difficult, if not impossible. A common outcome is talent staff crucial to the success of the company leave. Those who are left behind are likely to be relatively cynical. This typically leads to companies losing their innovate edge – often precisely what they were purchased for in the first place. This bodes poorly for the Nokia handsets division. Following the Microsoft deal it is likely to become an innovation deadzone, staffed by embittered cynics.

Members of the broader public are the final losers from this deal. Despite all the talk of how competitive the mobile business is, it is actually a market dominated by a few players. The increasing integration of hardware and software has meant a small handful of companies like Apple, Google and now Microsoft are in all our pockets.

This presents big concerns about who owns, controls and watches over our personal data. After all, many of these players are not just funky tech companies, they are also consumer surveillance companies. The purchase of Nokia by Microsoft represents a further step towards the consolidation of this market. But it also may represent a further step towards the consolidation of a few companies’ control over our personal data.

If this deal is likely to create so many losers, why is it going ahead? Well, there are likely to be some big winners as well. For one, Nokia shareholders seem to have benefited significantly with a big jump in share price following the announcement. The senior executives who put the deal together are also likely to do well out of the deal. Research suggests that when CEOs go on buying sprees – even unsuccessful ones - they are likely to get a bump in their reward package as well as a nice ego boost.

A final winner hidden in the wings is the army of advisers and consultants and such like who will gain a significant chunk of the transaction costs involved in trying to knit these two businesses together – and cleaning up the mess afterwards.

• Mobile phones
• Telecommunications
• Mergers and acquisitions

Project Officer, Student Volunteer Program

Audience Development Coordinator (fixed-term maternity cover)

Lecturer (Hindi-Urdu)

Director, Defence and Security

Opportunities with the new CIEHF

Watch CBS News

Why the Microsoft-Nokia merger is doomed

By Dave Johnson

September 10, 2013 / 3:38 PM EDT / MoneyWatch

(MoneyWatch) Last week, Microsoft announced it was purchasing a sizable chunk of the 150-year-old Finnish mobile phone giant Nokia for $7.2 billion -- that buys Microsoft the Devices and Services division. That's a large check to write -- even considering Microsoft's enormous cash reserves -- and follows the software maker's $900 million write-off for unsold Windows Surface tablets.

One measure of the merger is to ask a very simple question: Are you likely to purchase any phone that's born from this marriage?

• BYOD alert: Confidential data on personal devices
• Living with a smartphone -- and no cellular plan
• No-contract smartphone plan for $20/month

The answer, I think, is "no." And that's not a promising start to NokiaSoft.

As I recently discussed over at eHow Tech , Microsoft and Nokia find themselves in something of a pickle. Nokia, once dominant but long in decline because of the explosive popularity of Android and the iPhone, embraced Microsoft's Windows Phone as a way to become relevant again. But after two years of Windows Phone-powered Nokia handsets, Microsoft's operating system still has a meager 3.5 percent of the smartphone market.

That meager percentage is meaningful. It means that developers are unwilling to invest resources into creating applications for Windows-based phones, which in turn results in a fallow app ecosystem for the devices. For example, if you're an Android user considering switching to a Nokia Lumia but find that you can't get the apps you already know and love, why would you switch? After all, you don't judge phones by call quality anymore. Now it's all about what you do online.

Surely Microsoft knows all this, yet they pursued the Nokia deal anyway. Why? Well, Microsoft has already discussed a number of reasons for the purchase, like the ability to make more money per handset, less redundant marketing efforts and access to the source code for Nokia's mapping software -- in a word, synergy.

But there's a much bigger, more fundamental factor at work here: Microsoft desperately needs to be successful in the mobile space. The company has tried again and again over the last 15 years to have an impact in mobile -- from the tablet-optimized version of Windows XP to SPOT watches to Pocket PCs and Windows Mobile phones -- and has never gotten much traction. Meanwhile, desktop computers are in decline and will never again experience the growth the fueled the Microsoft of the 90s. Mobile computing is going to define the next 20 years as surely as Windows and Office defined the last 20. Any company that's predominantly a desktop computing business in 2018 might as well be selling answering machines and 8-tracks.

But Microsoft has an uphill battle, and if it doesn't address its app ecosystem in a meaningful way, the Nokia acquisition will be all for naught. It's more than just access to Netflix and Facebook. These days, smartphones are becoming an extension of our connected homes. Products like TIVO and Sonos are controlled via your smartphone. If you have a smart thermostat like Nest or a home security system like iSMartAlarm, you control them from your phone as well.

And that's just scratching the surface. Cars like the Nissan Leaf and Chevy Volt are smartphone operated; so are gadgets like smartwatches and home weather stations. The list goes on and on. Unfortunately, virtually none of those products have Windows Phone apps. That locks an increasingly tech-savvy, connected set of customers out of Microsoft's mobile universe.

Can Microsoft solve this fundamental problem? Maybe. But six years into the mobile revolution, we might be past the point at which the company can turn the tide -- with or without Nokia.

Image courtesy of Nokia

View all articles by Dave Johnson on CBS MoneyWatch » Dave Johnson is editor of eHow Tech and author of three dozen books, including the best-selling How to Do Everything with Your Digital Camera . Dave has previously worked at Microsoft and has written about technology for a long list of magazines that include PC World and Wired .

More from CBS News

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

CASE STUDY: ACQUISITION OF NOKIA’S DEVICES BUSINESS BY MICROSOFT CORPORATION

Related Papers

AARF Publications Journals

Supriya Mahajan

In present era advertisement has a great impact on the consumer’s behavior especially on children but when it became unethical it will lead the society in the wrong direction. The food product companies are now spending a great amount on advertisement to attract this segment. Fast food advertising has become a major concern in food product advertising. Good nutritional diet during childhood is essential for physical and mental growth. The Indian food consumption trend shows a shift over the last one decade. Now day’s children prefer junk food like Pizza, Burger, soft drinks instead of healthy food to eat which will affect their health. These junk food increases the weight of children and increase of weight may arises some other health related issues. The objective of the study is to understand the effect of advertisement on children, To understand the parental view point towards the unethical practices carried on by the food advertisers. This study also helps to find out parents preferences of food items for their children.

Meenakshisundaram Sundararajan

AARF Publications Journals , Story Masiyiwa

Thomas Kolawole Ojo

SERVQUAL method comprising five dimensions was used to assess passengers’ perspective of ICB transport service quality on Cape Coast- Accra route. A questionnaire involving a 26-item attributes was used to measure the expectations and perceptions of service quality on a five-point likert scale from strongly disagree to strongly disagree. The 162 copies of self administered questionnaires were served on passengers aboard by a mixture of purposive and systematic sampling to ascertain how socio economic characteristics influence perception of service quality and the differences between expectations and perceptions of the five dimensions. An independent sample t-test and ANOVA results showed that tangibility, empathy, assurances and responsiveness each had positive impacts on passengers’ perceptions of service quality. There emerged a significant difference in passengers’ perceptions of the dimensions of assurance, tangibility and responsiveness across sex of passengers; ages and level of education and income across reliability, assurance, tangibility and responsiveness.

Prashant Mehta

Luxury branding and marketing is a new ball-game altogether, both from the perspective of the marketer as well as the consumer. Luxury brands have always been seen as a fascinating space and luxury brand marketing as one of the most complicated areas to develop strategies and marketing mix. Consumer‟s perception of value is changing and their concept of luxury is metamorphosing. It therefore becomes imperative to view it form both angles that is in relation to and isolation from the „regular‟ goods and their marketing strategies. Over time LUXURY meant different things to people in different cultures. It is a conceptual and symbolic dimension mainly irrational and engages strong and intense multi-sensory emotions of consumers. It is also a culture and a philosophy and therefore requires deep understanding of the brand and its profile, before the adoption of business practices because its particulars and marketing mix strategies are fundamentally different from other types (regular) of goods and services. As quoted by Philip Kotler “Luxury is above all a world of brands”. The luxury brands go beyond the object, they are built from the reputation of its creations. It is crucial to listen to the client although consumer‟s attitudes and behaviors towards luxury are ambivalent and for them the most important characteristics are: quality of goods, self indulgence, and ancestral heritage. This paper identifies several key factors for luxury brand success by analyzing its marketing mix and how luxury goods are different from regular goods and then go on to explore some facets and trends of the luxury goods as well as their market and consumers, impact of internet technologies, and Intellectual Property violations. Considering that the luxury concept has shifted to the „new‟ meaning, we look into that aspect to understand the key drivers for luxury brands in today‟s context, as well as in the future.

RELATED PAPERS

Journal of Quantitative Spectroscopy and Radiative Transfer

Anthony Dean

Antoni Nicolau

silvana passos

Paul Lovejoy

Turki Tabak

European Actuarial Journal

Rovena Troplini

Alberto Martínez-Ortí

Vanda Obdržálková

Symposium 64

Horst Liebersbach

Journal of Applied Biosciences

Virgile Ahyi

Revista Brasileira De Pesquisa Em Educacao Em Ciencias

Roberto Nardi

Ultrasound in Obstetrics & Gynecology

International Journal of Reproduction, Contraception, Obstetrics and Gynecology

ADIL RASHID

Marine Biodiversity Records

Miguel Farfán

پژوهش‌های تجربی حسابداری

Ahmad Badri

Revista Del Centro Dermatologico Pascua

paola arteaga

BioMed Research International

Robert Robergs

Cindy Kartika Putri

Computers and Geotechnics

andrea diambra

Química Nova

Heitor Franco Andrade Junior

Proceedings of the sixth …

Lola Canamero

Molecular and Cellular Biochemistry

Luis A. Quesada-Allué

Revista Brasileira de Pesquisa em Educação em Ciências

Kristianne Figueiredo

International Journal of Research in Commerce, IT and Management

Kalyani Rangarajan

Katonai Jogi és Hadijogi Szemle

Puskás Anna

See More Documents Like This

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

• Solutions for industry
• Manufacturing and logistics
• Public sector
• Transportation
• Patent licensing
• Technology licensing
• SEP licensing principles
• Standardization
• Go to market
• Virtual events
• Video series
• Sustainability
• Security and privacy

Choose your language

• English (International)
• Chinese, Simplified
• Core networks
• Data center
• Fixed networks
• Internet of Things
• IP networks
• Mobile networks
• Optical networks
• Private networks
• Fixed networks services
• Services for mobile networks
• Cable operators
• Neutral hosts
• Rural broadband
• Subsea terrestrial networks
• Webscale network providers
• Training and certifications
• Financial services
• Manufacturing
• Research and education
• Stadiums, arenas and entertainment venues
• Transportation and logistics
• Services for industry
• Solutions for industry and the public sector
• Go to market partners
• Nokia Bell Labs
• We are Nokia

Nokia strengthens partnership with Microsoft to enhance performance at the mission critical industrial edge

Press Release

• Nokia MX Industrial Edge (MXIE) with Microsoft Azure Arc provide a powerful solution to enhance the performance of critical Industry 4.0 use cases
• Azure Arc capabilities on Nokia MX Industrial Edge and paired with private wireless offers enterprises more options to tap into Azure for their OT environments
• Solution brings additional simplicity by allowing enterprises to manage Azure workloads, including those running on MXIE, via Azure Arc  

30 May 2022

Espoo, Finland – Nokia today announced plans to integrate Microsoft Azure Arc capabilities into the Nokia MX Industrial Edge (MXIE) platform, unlocking the potential of mission critical applications for Industry 4.0 use cases.    Through the integration, Nokia MXIE and private wireless solution customers have seamless access to the full Azure ecosystem offering on MXIE.

Aimed to support industries including automotive, manufacturing, energy, logistics and government, the powerful combination will enable use cases by allowing customers to run applications in the traditional cloud, as well as directly on their premises. Collaboration in these areas will provide numerous benefits such as increasing worker safety through AI and automation, while decreasing the amount of needed backhaul with local data processing.

Microsoft Azure Arc offers a simple way to deploy and manage Azure applications on-premise with multi-cloud resources, such as virtual or physical servers and Kubernetes clusters. It simplifies governance and management by delivering a consistent multi-cloud and on-premise management platform.

The Nokia MXIE is a future-ready, high-capacity and highly-resilient as-a-service OT on-premise edge solution that accelerates the digital transformation of operational technology (OT), and is powered with 4.9/LTE and 5G connectivity provided by the Nokia Digital Automation Cloud (DAC). Microsoft Azure Arc running on Nokia MXIE provides enterprises with added access to Azure capabilities while benefiting from private wireless connected assets’ real-time data and on-premise, highly-resilient OT-centric edge processing.

Stephan Litjens, Vice President, Nokia Enterprise Solutions, said: “We have built a leadership position with our private wireless networks solution and MX Industrial Edge platform in large part by working with our valued partners. Our extended collaboration with Microsoft will enable and enhance the performance of Industry 4.0 mission critical applications allowing our customers to tap into Microsoft Azure Arc in the cloud and on the customer premise’s edge.”

Keith Sutton, CTO, Telco Service Line at Microsoft said: “Nokia is an established leader in fully integrated industrial edge and private wireless solutions to provide features and automated management tools that accelerate OT digitalization. With Microsoft Azure Arc, a wide ecosystem of applications, and our long standing work with Nokia, we can provide AI-powered insights and identify solutions to workflow issues for mission critical Industry 4.0 applications running at the edge.” 

Nokia has deployed mission-critical networks to more than 2,200 leading enterprise customers in the transport, energy, large enterprise, manufacturing, webscale and public sector segments around the globe. It has also extended its expertise to more than 450 large private wireless customers worldwide across an array of sectors, and has been cited by numerous industry analysts as the leading provider of private wireless networking worldwide.

• Webpage: Nokia Digital Automation Cloud | Nokia
• Webpage: Nokia Industry 4.0
• Webpage: Nokia MX Industrial Edge  

About Nokia At Nokia, we create technology that helps the world act together.

As a trusted partner for critical networks, we are committed to innovation and technology leadership across mobile, fixed and cloud networks. We create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs.

Adhering to the highest standards of integrity and security, we help build the capabilities needed for a more productive, sustainable and inclusive world.

Media Inquiries: Nokia Communications Email:  [email protected]