The International Impact of the Microsoft-Nokia Deal
Change is afoot in the mobile market. Microsoft is acquiring Nokia’s hardware and services divisions, and news of the deal is pulsing on the Internet. The deal will have a strong international impact, so we’ve cast a global eye on the news item. Here’s our summary of how we feel the acquisition will be received in Europe, Asia, and North America:
The most significant impact of the Microsoft acquisition will be in Finland. Before Nokia’s business starting sinking in the face of Apple competition, the Finnish company had reached a market value of $300 billion and drove one-fifth of Finland’s exports. Yesterday Reuters reported that Finnish business leaders were reeling from the announcement — after all, the company was “almost embedded into Finnish DNA.” With 32,000 Nokia employees now moving to Microsoft — and only approximately 700 employed by big-name game developers Rovio and Supercell — Finland is fearful of losing any advantage it once hoped for in the mobile industry.
But there are two sides to every story. Nokia stocks rose up to 48% yesterday as news broke that the company would abandon its sinking handheld business. Steve Ballmer also announced plans to build a Microsoft data center in Finland: “We are deeply committed to Finland [and can now announce] Finland as the home for a new data center for Microsoft that will serve customers around Europe,” said the Microsoft CEO. Perhaps Finns will see an upside to the transaction. Helsinki’s gaming industry has earned recognition as Finnish publishers Rovio (Angry Birds) and Supercell (Clash of Clans, Hay Day) continue to grow rapidly across the globe. The Finnish startup scene is also busy creating solutions for, among others, mobile app testing and even indoor maps.
The bottom line is that the deal – at this stage – has more emotional drawbacks than economic ones. Europeans won’t necessarily feel market pain from this deal, but they might suffer from a sense of dented pride.
The key issue in the Asian market is Microsoft’s relationship with Samsung. Samsung, based in South Korea, had been providing a small number of devices to Microsoft to run on Windows Phone. The Wall Street Journal predicts that in the wake of the deal, Samsung will start backing away from Windows Phone and crank up efforts to develop its own software alternatives to Android.
Most media outlets agree that the deal means death for Blackberry — unless the Canadian company can learn to accept its fate as a niche player and narrow its focus. Meanwhile, some are taking the news as a sign that major U.S. players are hoping to snatch up floundering European assets. The big question, of course, is whether the Nokia deal will give Microsoft the competitive edge it needs to start rubbing shoulders with U.S. giants Apple and Google in the smartphone market.