Nokia $7.2 bn sale to Microsoft: Was there no other option?

Post the Nokia-Microsoft deal, many are asking if this was the only option left for Nokia. Remember Nokia was the global mobile phone leader before Apple’s iPhone came into the picture and changed the mobile game forever.

Why Nokia sold its handset business has raised several questions. As this piece in Forbes notes,the motivation of Stephen Elop will now come under intense scrutiny. Elop came from Microsoft and decided very quickly that Windows was the only hope for Nokia’s smartphone unit, which was still selling more than 24 M units per quarter in early 2011. After he eliminated all alternative operating system options, he has now decided to sell Nokia’s smartphone unit at a notably low price… to Microsoft, the company he will now rejoin.

Others feel the selling price was too low. After all Google paid nearly $12.5 billion for Motorola Mobility. Is brand Nokia worth less than Motorola? Another Forbes piece says,

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[caption id=“attachment_1083833” align=“alignleft” width=“380”]  Was Nokia undervalued? AP image[/caption]

This sale looks like a gift for Microsoft and the sequence of relationship building between the two companies, Nokia hiring a Microsoft CEO, burning its own operating system in favor of Windows, and then selling to Microsoft, has left a sour taste in some quarters,

This is also a good time to perhaps relook at the fact that when Nokia decided to shut down Symbian and walk alone with Microsoft’s Windows Phone 8, many were unconvinced.

In fact the man who was incharge of Symbian at Nokia had told CNET in 2012 that Nokia’s decision to go with just Windows Phone 8 was a bad one. He had said,

When I was at Nokia and we shipped a Symbian product and it was bad, in its worst incarnation we knew that if we just flipped the switch, we could move 2.5 to three million units… And now look at it – they flipped the switch and oh, 200,000 [Windows Phone] units out of the gate. Huh? Only selling in the US, under AT&T’s moniker. If you can’t flip the switch like that, Nokia’s dead and devalued.

Williams’ point was that Symbian sales were still better than Windows Phone 8 at that time and that Elop killed the OS too soon. It needs to be pointed out that Nokia was trying to make Symbian an open source platform as early as 2008.

The sale does seem surprising given that in July, Stephen Elop had told The Wall Street Journal that it was “hard to understand the rationale” for selling Nokia’s devices business.

“That possibility to be successful is there,” he said. “If we keep executing well and keep delivering, then our future can be quite bright.”

There’s no denying however that deal is great news for Microsoft. It’s Surface Tablet has been a failure as far as hardware is concerned. Hopefully it won’t mess up Nokia’s hardware unit either and will ensure that the excellent quality that people have come to expect of Nokia phones will continue.

For Nokia, some are asking whether it would have done better with Android. Stephen Elop doesn’t think so. “I’m very happy with the decision we made,” he said to The__Guardian in July this year. “What we were worried about a couple of years ago was the very high risk that one hardware manufacturer could come to dominate Android. We had a suspicion of who it might be, because of the resources available, the vertical integration, and we were respectful of the fact that we were quite late in making that decision. Many others were in that space already.”