Microsoft just annouced it’s going to buy Nokia’s handset business.

There’s some interesting things to note…

  • It’s cheaper than Skype
    About a billion dollars cheaper. Does that mean Nokia was a bargain – or Skype was a bad buy? Either way, I think there’s scope for lawsuits here – either from Microsoft shareholders against Ballmer for paying too much for Skype, or from Nokia shareholders against Elop for selling Nokia too cheaply. Worst case scenario? Both.
  • Elop will be Microsoft’s new CEO
    He has to be. I can’t imagine anyone else who wouldn’t come in and say “OK, let’s drop all the businesses that are losing money” – or worse, “let’s concentrate on everything that makes over a billion dollars a year”. That would leave the handset business high and dry. Turns out one or two people agree with me
  • No MS breakup… probably
    As Mary Jo Foley points out, Microsoft management aren’t keen on a split up. They want to be a GE style conglomerate. But the issue might not be what management want – antitrust may yet come back to haunt them. Even if the DoJ don’t say anything, you can be guaranteed the EU will be paying close attention.
  • The takeover is good news for Google, bad news for Microsoft and Nokia
    Seriously, this is the big takeaway. Nokia couldn’t make money on it despite their in-depth knowledge of the phone market going back years. But can you see any other phone builders (HTC in particular) sticking with Windows Phone when Microsoft are competing against them? If anything, this will lead to manufacturers looking to build quality Android phones that compete with the low end Lumias, rather than leaving Windows Phone to pick up that market – and let’s face it, Windows Phone is really only competitive with low-end Android handsets right now.
  • Danger
    Remember what happened the last time Microsoft took over a handset company? Yeah, the KIN. Enough said.

On the face of it, this looks like a sensible deal. But the truth is, with Ballmer set to retire, the only way this deal makes sense is it’s bringing back Stephen Elop as the new Microsoft CEO. I think otherwise, there are way too many risks for it to make sense.

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