Microsoft - Nokia Deal

Microsoft - Nokia Deal

Microsoft - Nokia DealWhat does it mean for Microsoft? How Soft Co. planned to generate profits from cellphone maker that was bleeding moneyNokias bleeding money costs Microsoft 8 cents from EPS earnings per share first quarter Microsoft expects Nokia to break even by 2016.

Action Plan : Devices would focus on high and low cost Windows smartphones 2 BU smart devices /mobile phones would become one, cutting overlap and overhead. To Reduce engineering in Beijing & San Diego and unwind engineering in Oulu, Finland.To Shift manufacturing to lower cost areas like Manaus, Brazil and Reynosa, Mexico; and reduce manufacturing in Beijing and Dongguan, China.Microsoft acquires Nokias phone Business

Microsoft acquired Nokias Qualcomm, other Key IP licenses

Microsoft licenses Nokias patents for use across all Microsoft products

Nokia retains NSN , HERE , its CTO office and its patent portfolio

IIMicrosoft leads the Computer Operating Systems Market with more than 90% of Market ShareOverview of the Computer MarketConsulting Project | Microsoft reaping synergies from Nokia acquisitionSource: NetMarketShare Market Share Reports1592,0%LinuxMac OSWindows> There are only three players in the computer operating systems market> Microsoft Windows is the market leader with a gap of more than 85% to Apple Mac OSDesktop Operating System Market Share|2012; Market Share|6,8%1,1%Overview of the Smartphone MarketTop Smartphone Vendors Worldwide|2012; Market Share|41,1%4,6%4,9%19,1%30,3%OthersHTCNokiaAppleSamsung> Almost half of the market is concentrated in two players with a combined market share of 49,4%> Altough Nokia is third in Market Share there is a gap of 14,2% to the second playerIINokia was the third worldwide top vendor of smartphones in the year of 2012 in a market where Samsung and Apple are the market leadersConsulting Project | Microsoft reaping synergies from Nokia acquisitionSource: IDC Worldwide Mobile Phone Tracker16Top Smartphone Operating System Worldwide|1Q 2013; Market Share|Microsoft Windows Phone was the third Smartphone Operating System in the market on being a recent business for Microsoft4,5%3,2%17,3%75,0%OthersWindows PhoneIOSAndroid> The market is mostly controled by two players with a combined market share of 92,3%> Microsoft Windows Phone is third player in Operating System with a gap of 14,1% to the second playerIIOverview of the Smartphone MarketConsulting Project | Microsoft reaping synergies from Nokia acquisitionSource: IDC Worldwide Quarterly Mobile Phone Tracker10Microsoft bought Nokia to Devices & Services business for EUR 5.44 billion all-cash transaction inserted in the new strategyNokia AcquisitionWhat the business includesMobile Phones and Smart Devices business units as well as the design team, operations includingproduction facilities, sales and marketing activities and support functionsHuman Resources transferralApproximately 32,000 people are expected to transfer to Microsoft at closingPatents Included10 year non-exclusive license to Nokia patents with reciprocal rights to utilize Microsoft patents in Nokia HERE services. Option to extend the mutual agreement to perpetuityTotal purchase priceThe purchase price had two components: EUR 3.79 billion relates to the purchase of the Devices & Services business and EUR 1.65 billion relates to the mutual patent license agreement and future optionIIIConsulting Project | Microsoft reaping synergies from Nokia acquisitionSource: Nokias announcement presentation18Nokia Acquisition was also an integration of hardware knowledge and expertise with Microsoft software backgroundCompanies BackgroundsSpecialized in Software Computer Operating SystemsWorldwide Market Leader computer operating systems In 2012Specialized in Hardware Mobile Phones and Smart devicesWorldwide Market Leader Mobile PhonesUntil 2012Software and Hardware background experiences together for a more competitive MicrosoftIIIConsulting Project | Microsoft reaping synergies from Nokia acquisition19Main opportunities for Microsoft lead to an increase of competitivenessand challenges are based in the integration of all the new assetsOpportunities and Challenges+__OpportunitiesChallengesWider range of productsIncrease the chance of Innovation breakthroughComplementarity between productsIncreased costumer and company benefitsPlacement for Nokia employeesIntegration between new teams and associated costs from managing all the processCompetition(Samsung, Apple and Google)IVConsulting Project | Microsoft reaping synergies from Nokia acquisition20Nokia acquisition brings some Key capabilities to Microsoft and empowers growth in potential marketsOperational SynergiesIVDevice design and engineeringKey CapabilitiesDevice Distributionand SalesGlobally scaledsupply chainOperator sales and supportMature operational processes and systems21InternalCostumer OrientedCostumers perception on Microsoftwith a full range from entertainment to productivityMarket Opportunities Wider set of products, allowing Microsoft to compete for better market sharesExternalNokia acquisition will lead to several changes within Microsoft that contribute as increased benefits for the company and costumersKey TakeawaysControl Over Technology Being able to develop both hardware and software with integrated innovationIncreased BenefitsBetter Cost Structure Vertical integration between Microsoft and Nokia structuresIVConsulting Project | Microsoft reaping synergies from Nokia acquisition30