November 25, 2013

Nokia agrees to sell smartphone division to Microsoft

Given that the smartphone world is dominated by Apple and Samsung, many consumers forget that there are other players struggling for third place. One such contender is Nokia, maker of the critically-acclaimed but commercially tepid Windows Phone, known as the Lumia.

While the former two companies have sold a combined 120 million smartphones in the last quarter, Nokia's Lumia has only managed to move 8.8 million units. As the Finnish company struggles to reach profitability, it has realized that the only way forward is to separate itself from its struggling smartphone brand.

That's why, according to a recent Bloomberg report, Nokia investors have approved the sale of the company's mobile phone unit to Microsoft for $7.4 billion.

"Continuing our existing strategy would have resulted in great difficulties," Chairman Risto Siilasmaa reportedly told investors. "We have no doubt that this is the right decision."

Without this division, Nokia will be able to focus on strengthening its network-equipment unit, which comprises 90 percent of the company's sales.

"I consider the sale as positive," shareholder Kari Nieminen told the news source. "Nokia is able to rid itself of the more unstable business and focus on growing the stable ones."

Meanwhile, Microsoft is expected to benefit from the technology acquisition. Nokia recently released two smartphones with six-inch displays, as well as its first tablet. Introducing the larger phones was a particularly strong move, as such devices are popular, yet not always easy to find on the market (all of Apple's smartphones are smaller). With greater control over hardware, Microsoft should be able to find unique ways to integrate its software into these devices.