Microsoft admits failure in Nokia acquisition

When Microsoft announced its deal to acquire Nokia’s mobile phone business, Steven A. Ballmer, Microsoft’s chief executive at the time, boasted that the deal was a “bold step into the future.” But on Wednesday, Microsoft’s current chief executive, Satya Nadella, sought to leave that deal in the past. He announced a broad rethinking of the company’s phone strategy, a change that includes cutting up to 7,800 jobs, mostly from the phone business, and writing off nearly all of the value of its Nokia acquisition. The move is a clear acknowledgment that the deal was a multibillion-dollar strategic blunder by Mr. Ballmer, who had envisioned it as a way to make Microsoft more competitive in the mobile market.

While Microsoft will not stop making smartphones, Mr. Nadella said on Wednesday that it would no longer focus on the growth of that business. Microsoft has continued to lose market share in smartphones since acquiring Nokia’s handset business. The company has failed to turn the Windows Phone operating system, which runs on its handsets, into a vibrant alternative to the two leading mobile platforms, iOS from Apple and Android from Google.

This has been “a big blow” for Finland's economy. The "death curve" of their electronics industry as Nokia faltered and fell to just 2-3 per cent of the global smartphone market, along with falling global demand for paper products and EU sanctions on neighboring Russia, have entrenched the Scandinavian country in a three-year recession. Meanwhile, Nokia has confirmed rumors that it intends to reenter the smartphone market. Nokia certainly won’t be recouping the massive investment required to start manufacturing smartphones again, instead they would design the products and earn the royalties, but everything else would be up to whomever they partner with.