Microsoft makes push for mobile market with Nokia buy

People browse Windows-based Nokia smartphones in Helsinki. Microsoft?s

People browse Windows-based Nokia smartphones in Helsinki. Microsoft’s planned $7.2-billion purchase of the company is a move to gain more of the mobile market. (Sept. 3, 2013) (Credit: Bloomberg News)

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Microsoft is wagering $7.2 billion on the idea that owning Nokia's phone business will help the software giant grab a bigger slice of the mobile computing market from Apple and Google.

The Windows maker is buying Nokia Corp.'s lineup of smartphones and a portfolio of patents and services. The 5.44-billion-euro ($7.2-billion) deal, announced late Monday, marks a major step in the company's push to transform itself from a software maker focused on desktop and laptop computers into a more versatile and nimble company that delivers services on any kind of Internet-connected gadget.

Some analysts questioned whether buying up the mobile business of Nokia, the fading star of the cellphone world, would aid Microsoft.

"Until there are signs that [Microsoft] can innovate and successfully execute in the post-PC era, we expect the stock to languish at current levels," said Janney analysts Yun Kim and Alice Hur. Microsoft's shares fell $1.52, or 4.55 percent, to $31.88 in trading Tuesday.

Microsoft, based in Redmond, Wash., has been racing to catch up with customers who are increasingly pursuing their digital lives on smartphones and tablet computers rather than traditional PCs. The shift is weakening Microsoft, which has dominated the PC software market for the past 30 years, and empowering Apple Inc., the maker of the trendsetting iPhone and iPad, and Google Inc., which gives away the world's most popular mobile operating system, Android.

Microsoft is now betting it will have a better chance of narrowing the gap with its rivals if it seizes complete control over how mobile devices work with its Windows software.

The acquisition is being made at the same time that Microsoft is looking for a new leader. Just 10 days ago CEO Steven Ballmer, 57, announced he will step down within the next year.

Stephen Elop, who left Microsoft in 2010 to become Nokia chief executive, will step down as president and CEO of the company to become executive vice president of Nokia devices and services and will rejoin Microsoft once the acquisition closes. The deal has fueled speculation that Elop, a former Microsoft executive, will emerge as a top candidate to succeed Ballmer.

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