Microsoft Might Benefit from the Nokia Deal

Nokia might need gotten the higher of Microsoft on in marketing its once-dominant telephone business to Microsoft and moving into a broad patent agreement in an exceedingly deal price $7.1 billion. Microsoft’s stock worth took an enormous hit. And no wonder: given the declining state of Nokia’s business, the deal looked like a desperate conceive to shore the biggest manufacturer of phones that run Windows before it went underneath or switched to Google’s Android system.

But there square measure a minimum of four ways in which Microsoft would possibly return up a winner within the end of the day. With but four p.c of the world marketplace for smartphone in operation systems, Microsoft has very little a lot of to lose and lots, probably, to realize because it tries to claw market share from Android and Apple.
Here’s however Microsoft may gain advantage considerably.

1. Skype, the dominant voice-over-Internet service closely-held by Microsoft, may become a lot of powerful. That’s a lot of of the globe than Apple or Google will address with their Face Time or Hangouts chat services. Skype is being steady integrated a lot of deeply into Windows; it’ll be already installed in Windows eight.1 on the desktop. It may become the way for Microsoft to contend with standard cellular carriers on voice and electronic communication, wherever there’s cash to be created.

More usually, Microsoft would possibly currently be able to do one thing that Apple or Google haven’t or can’t: integrate mobile devices and desktops into a a lot of seamless expertise. Google is proscribed during this regard as a result of it doesn’t management PCs, though it\’s doing things like swing Google currently, the company’s intelligent personal assistant, into its main web site. Apple has needed users to use iTunes, and a lot of recently i Cloud, to synchronize up their phones with their laptops, however maybe Microsoft will use Skype and alternative apps because the basis of a less complicated and a lot of compelling multi-device expertise.

2. deed aside the patents that Microsoft nonheritable, Nokia retains possession of a number of the foremost valuable and basic patents—known as “utility patents” within the wireless trade. whereas Microsoft didn’t purchase those, it did license all of them for ten years, giving it a free reign that rival phone manufacturers won’t essentially have.

Over the last twenty years approximately, Nokia spent over $55 billion on R&D and created acquisitions that gave it a fund of thirty,000 patents. several of those cowl basic operations and ones for wireless standards like GSM (see “Nokia’s Patents square measure Its Last Line of Defense”). This is often currently basic to syncing calendars on totally different devices. And currently that it\’s freed from its telephone business, Nokia will focus a lot of on monetizing this basic IP—in court, if necessary. Nokia can now not need to worry concerning counter suits alleging infringements by technologies in its phones, since it\’ll now not be creating or marketing any. And if Nokia will attempt to choose the jugular, Microsoft’s neck are going to be protected.

Nokia has shown aggressiveness before. Apple united to settle 2 years past. Nokia gets over $600 million once a year in patent-related revenue.

Nokia’s announcement enclosed this clue: the corporate plans to “expand its industry-leading technology licensing program, spanning technologies that change quality these days and tomorrow.”

3. Microsoft could gain a deeper store of analysis information to draw from. Nokia spent lavishly on R&D—including over $5 billion last year alone—and had twenty seven,551 R&D workers at the tip of 2012. It’s true that the worth of their collective output is dubious: Nokia R&D didn’t turn out technologies that would dent the dominance of Apple and Samsung within the smartphone business (see “Can This Man Work Magic?”).

Oskar Sodergren, a Nokia interpreter, says that whereas the Nokia research facility stays with Nokia, all R&D workers associated with mobile product and smartphones can all transfer to Microsoft. Presumably, these square measure the people that gave USA things like “Morph Concept” technologies—in that a phone or watch is created versatile and clear, with intrinsical solar-power recharging and integrated sensors.

A Microsoft analysis interpreter, Chrissy Vaughn, says the corporate wasn’t elaborating on however the analysis units would possibly merge. however Steve Ballmer, Microsoft’s outgoing chief operating officer, same in an exceedingly press decision yesterday that “Finland can become the hub and also the center for our phone R&D.”

4. The smartphone business continues to be ramping up quickly, which suggests there remains lots of chance, particularly in international markets that square measure off from saturated. Nokia sells over two hundred million phones annually—and most of them aren’t in Europe or North America.