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Mergers & acquisitions

Poll: Microsoft's Nokia Buy Has Most Impact

This year has already seen its fair share of game-changing acquisitions, but none more so than Microsoft's purchase of Nokia's devices and services business.

That's the perspective of 177 Light Reading readers, at least. In a recent survey of our community, 35 percent responded that Microsoft Corp. (Nasdaq: MSFT)'s bid to acquire Nokia Corp. (NYSE: NOK)'s devices and services business for $7.2 billion will have the largest impact on the industry. Vodafone Group plc (NYSE: VOD) selling its stake in Verizon Wireless came in second, attracting 21 percent of votes. (See Nokia Sells Devices Business to Microsoft and Vodafone Agrees to $130B Verizon Stake Sale.)

These two were far-and-away the winners, but third place, at 15 percent, went to the love triangle of SoftBank Corp. , Sprint Corp. (NYSE: S), and Clearwire. (See Softbank Closes on Sprint Acquisition and Sprint Shareholders Approve SoftBank Merger.)

For the remaining options (and there were several):

  • 8 percent chose Oracle Corp. (Nasdaq: ORCL)'s purchase of both AcmePacket and Tekelec
  • 7 percent picked Arris Group Inc. (Nasdaq: ARRS)'s acquisition of Motorola Home
  • 5 percent liked T-Mobile US Inc. 's purchase of MetroPCS
  • 4 percent went to Nokia taking total ownership of NSN
  • 3 percent opted for Liberty Global Inc. (Nasdaq: LBTY)'s Virgin Media buy

All of the acquisitions are having ripple effects in their areas of the industry, but mobile players have been consolidating at the most rapid clip. Microsoft and Vodafone may have pulled in the most votes in part due to their timing -- they were announced right before the poll was posted. But the impact either will have on the industry remains to be seen.

For Microsoft, acquiring its flagship device partner could help the software giant build tightly integrated handsets and ultimately carve out room for a third operating system in the mobile market. Or, the gamble might not pay off as it risks alienating other Windows Phone partners. (See The Nokia/Microsoft Conspiracy Theory.)

Verizon paid a big premium -- $130 billion -- to get its independence. The implications of the deal may be just financial, as many expect, but they could also affect how Verizon does business. As its own company, Verizon has the opportunity to unify its FiOS and wireless businesses, including its backend processes and billing systems and even the services it offers customers.

These services could get a lot more powerful, connected, and intelligent, which meshes well with the carrier's far-reaching plans for machine-to-machine communications and the connected car. Verizon hasn't committed to anything yet, but the doors are open now that it's no longer beholden to an overseas co-owner.

Read more about the potential implications of this year's other mergers below:

— Sarah Reedy, Senior Editor, Light Reading

[email protected] 9/17/2013 | 5:50:47 AM
Re: On second thoughts Ultimately I can only see this helping the other main players in the market AND improve the prospects for new innovative startups to make a mark - I think the reference earlier in this thread to Jolla is an astute one.... this could be the trigger for Jolla to make an impact and for its Sailfish OS to find new possibilities. But there are also plenty of hungry smartphone/device tech firms coming from China, India, APAC... 
DOShea 9/16/2013 | 10:02:23 PM
Re: On second thoughts I agree with you there. Hard to see a real market shift happening with Microsoft-Nokia any time soon. I think there is an argument here for Oracle's deals potential having broader industry impact than some of these others, essentially bring a new giant into several telecom market segments.
R Clark 9/16/2013 | 3:03:38 AM
On second thoughts Now that I've actually thought about it, all the Nokia acquisition just changes out one of the players but doesn't really change the industry landscape. It's hard to see MS-Nokia getting out of third place in the OS game and, now that it's been revealed, you wonder how much MS was panicked by Nokia's Android 'threat'.

The cross-border M&As will have a bigger impact in giving operators more scale and a stronger hand in dealing with handset and network vendors.

 
lanbrown 9/14/2013 | 5:53:13 PM
Re: Long-term effects of Verizon-Voda The problem is, Microsoft doesn't listen to what the consumer wants.  Windows 8 failed, so they asked the consumer what they wanted.  Microsoft took that, tossed it in the trash and said here is Windows 8.1 and here is your start button that doesn't act as one.

 

If having the hardware side of the house meant success, then how come Surface RT was a flop and still is?  Surface Pro isn't much better.  They are 100% Microsoft and are both failures.  Having a handset division will not help them.  The fact is, buying Nokia hurts them.  Nokia was committed to WP.  Now Microsoft has non-exclusive rights to Nokia patents.  That means Pureview will be found on a competing handset.  The HD microphone that HTC was sued over for using, now Nokia can glasdly license it too them.  Before HTC was a competitor, not they will be a license holder.  Nokia Maps, that will be found on other platforms as well now.  I wouldn't be surprised to see it on the Jolla handset when it is released.  They could offer it for the Tizen handset as well.  Don't forget about Firefox and Ubuntu as well.  Some of the unique features to WP was because of Nokia, unique features that won't be unique any longer.

 

Also, the agreement says Nokia stays out of the handset side for around two years or so.  The new Nokia CEO might be looking at buying someone after that time has lapsed; someone like Jolla possibly?

 

At the end of the day, the Nokia deal is actually going to hurt Microsoft.  Their "ecosystem" requires them to infuse cash to sustain it.  That by itself is not sustainable and thus not an ecosystem at all.
Liz Greenberg 9/13/2013 | 1:54:04 PM
Re: Long-term effects of Verizon-Voda Hopefully Microsoft will move quickly, but more importantly in a way that users embrace.  They have been missing that part recently and hopefuly can re-direct with appropriate pricing, marketing, etc.
Sarah Thomas 9/13/2013 | 11:56:58 AM
Re: Long-term effects of Verizon-Voda All of these acquisitions are question marks, even if they're closed. It will take a while for the new parent companies to put strategies into place. Microsoft is one that will have to move quickly, but I think it'll be a year or two before we see any major changes at Verizon.
DanJones 9/13/2013 | 10:46:33 AM
Long-term effects of Verizon-Voda Should be really interesting, Verizon will need to figure out how to continue growing revenues from a saturated market.
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