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Business Management

'The phone is the key to everything': Microsoft now owns Nokia's device business

It's official: Microsoft now fully owns Nokia's device business, more than 32,000 new employees, the second spot on the list of the world's most prolific phone makers, and full control over the destiny of Windows Phone.

"The opportunity for Microsoft to be both a devices and services company, so that it can deliver the complete proposition to its consumers, is at the heart of this," former Nokia CEO and soon-to-be Microsoft devices head Stephen Elop said in Microsoft's announcement of the deal.

"Nokia certainly has a tremendous depth of experience in the design, the manufacturing and delivery of devices," Elop said. "Nokia over the years has literally delivered billions of devices. Just in the last year alone, some hundreds of millions."

Indeed it has--though only 30 million of those phones were of the Windows Phone-packing Lumia brand in 2013, indicating that the new Microsoft-Nokia merger still has a daunting road ahead if Windows Phones are ever to truly become mainstream. That's just one of the reasons that we expect Microsoft to tolerate the existence of the Nokia X, a budget-priced Android phone chock full of Microsoft services and a modified, Windows Phone-like interface.

It's a phone for the masses, and it can help get Microsoft's services in front of the masses. And make no mistake: As Microsoft evolves into a device and services business and continues with its "Windows Everywhere" push, simply getting OneDrive, Outlook.com, Skype, and other services into the hands of a critical mass of users around the world is the end goal. For that, the phone is the key to everything, the pocket computer capable of becoming the introduction to and daily front for the wider Windows ecosystem.

And while growing Windows Phone is clearly a major priority for the Microsoft-owned Nokia in the U.S, the focus may be even stronger in developing nations, where billions of people are buying their first phones--and where billions of people could care less about the iconic Windows desktop. Microsoft makes that plain in its press release, which says "With the Nokia mobile phone business, Microsoft will target the affordable mobile devices market, a $50 billion annual opportunity, delivering the first mobile experience to the next billion people while introducing Microsoft services to new customers around the world."

Here's Elop again:

"The vast majority of people do not have, nor will they ever have a personal computer. They haven't been exposed to Windows or Office, or anything like that, and in their lives it's unlikely that they will. And yet through the mobile phone business we have an opportunity to introduce what we like to call the next billion people, the next billion people to connect to the Internet, to Microsoft, because they'll have an opportunity perhaps to have a first Skype experience, or a first experience with Bing, as an example. And so there are literally billions of people who can be exposed to Microsoft for the very first time."

Devices and services. That's what Nokia brings to the table--the crystallization of what new CEO Satya Nadella said when he took the reins at the Microsoft: "The world going forward is more of a software-powered world, delivered in devices." Or, as Nadella put more bluntly in last night's investor's call: "In a world of ubiquitous computing we want Windows to be ubiquitous."

The phone is the key to everything in a ubiquitous world. Welcome to One Microsoft, Nokia.

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