Last September, Microsoft made a deal with Nokia to purchase all of its smartphone and devices business for $7.2 billion.
Finally, after 6 months the deal is the closed. So, the leadership team in charge of this division of Nokia along with all of its smartphone business will transfer to Microsoft effective immediately.
End of an Era
As previously reported, Microsoft is not going to use the traditional Nokia name for its smartphones from now on. Instead, the company will conduct business under the legal name Microsoft Mobile Oy. In this regard, the company has already sent out letters to dealers all around Finland. All legal invoices and VAT taxes paid should under the new name according to the letter from Microsoft Mobile.
The closure of the deal also means that Nokia which was once the world’s largest smartphone maker will lose majority of its business. The reduced company is reportedly focusing on developing and licensing its patents to other manufacturers. But exact details about their plans have not been revealed.
The Emergence of Microsoft Mobile
With this deal, Microsoft could speed up the growth of its smartphone sector. According to reports, Microsoft holds less than 3% of the total global smartphone market and this deal could potentially increase its overall holding in the coming years.
Also, the deal will increase the profitability of its mobile division. Given that Nokia was its largest OEM partner, the company earned about $10 per smartphone sale according to earlier terms. However, after the deal, the company no longer have to pay marketing and development charges to Nokia and hence, the profitability per device is expected to increase to about $40 per smartphone. This will definitely help increase the overall financial standing of the company. Also, Microsoft could reduce its prices to drive up the demand, but that’s just a possibility and the company has not yet announced anything related to its future plans with the new acquisition.
Support for Feature phones
Although it was feared that Microsoft would scrap the Asha and Nokia X project, according to Stephen Elop, Microsoft would continue to support these feature phones. This is kind of surprising given that Nokia X runs on a rival platform, i.e. Android. However, one important thing to note here is that the company has just said that they would support these feature phones, but it is still not clear whether they would continue with the development of these non-windows devices.
Nokia-Microsoft deal could turn the tide for the company in the smartphone industry, so it would be interesting to see how the company performs in the next few years.
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