Nokia and Microsoft

Microsoft completes the Nokia acquisition–and now is selling Android phones

Microsoft has been a hardware company for a long time. With the release of the first Microsoft Mouse in 1983, the company that began with a version of BASIC written for what’s considered the first personal computer has had a successful side business selling hardware.

But now, Microsoft is no longer a dabbler. Early this morning, the company closed on its approximately $7.5 billion acquisition of Nokia’s hardware operations. Although Nokia is not the monster it once was – particularly in the smartphone arena – it remains the No. 2 seller of mobile phones in the world, behind Samsung. But the vast majority of those are not smartphones.

As Tom Warren at The Verge points, Nokia sold 251 million mobile phones last year, only a small portion of which was running Microsoft’s Windows Phone operating system.

In fact, Microsoft is now in the business of selling Android phones. Nokia has a line of smartphones called Nokia X, a fascinating hybrid with a Windows-like interface running atop a forked version of Android

Nokia’s Android handsets are the most intriguing part of the deal, as they shed some light on how Microsoft might approach the messy and complex nature of shipping devices that don’t run the company’s Windows software. The Nokia X introduces a new “forked” version of Android that’s akin to what Amazon does with its Kindle Fire line, but it also includes a Windows Phone-like UI and an Android store that’s separate to Google Play. Microsoft has the chance to control another app store, but also a solid opportunity to push its own cloud-based services. OneDrive, Outlook, and Skype are all preinstalled on Nokia X handsets, and Bing is the default search engine. Microsoft CEO Satya Nadella is taking a “cloud first, mobile first” approach, and the Nokia X or Office on iPad are good examples of how Microsoft can leverage platforms outside of Windows to push and sell services. “The feature phone product family coming to Microsoft will start to have more of the Microsoft services shipped on those phones right out of the gate.” admits Microsoft’s Tom Gibbons, the corporate vice president who is responsible for the Nokia integration.

New Microsoft CEO Satya Nadella has indicated a greater willingness to work with platforms other than Windows. That gives the company a chance to extend its software-and-services reach. In the past, Microsoft might have just killed off the Android piece of an acquisition such as this, but that’s not a given now. I suspect Microsoft sees this as an opportunity, rather than an annoyance. And it will be a good test of whether the company has recovered from its descent out of relevancy.