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Microsoft and Nokia... Google and Motorola v 2.0? Doesn't look like it...

The march toward mobile oligarchy has taken another turn as Nokia has sold its handset business to Microsoft for $7.2 billion.  http://www.reuters.com/article/2013/09/03/us-microsoft-nokia-idUSBRE98202V20130903

What used to be an early titan of the mobile market in its own right is now selling its smartphone and cellular handset business to Microsoft.  Their shrinking market share and decision to hitch their fortunes to the Windows phone model are cited by experts as primary reasons for this deal.  In 2009 Nokia made about 69% of their revenue from mobile phones, on total revenues of over $40 billion.  In 2012, these numbers slipped to 52% on $30 billion (from around $28 billion to just over $15 billion).  And importantly, watched their market share versus Android and Apple shrink precipitously.

Given that Microsoft and Nokia contracts were purportedly getting close to ending/renewal, there was added pressure on Microsoft to pull the trigger or perhaps lose their biggest channel for Microsoft phones - Nokia might have switched to Android.

That is what perhaps makes this different than the Google/Motorola deal - and different than the groundbreaking multi-billion dollar transaction for Nortel's patent portfolio.  While these deals were at least substantially (if not primarily) about the patents, the Microsoft/Nokia deal is about trying to survive in a market where both partners were struggling, and in particular Microsoft's determination to stay relevant in mobile phones.  It is noteworthy that Nokia's surviviing business model relies on their relatively strong network technologies/infrastructure business (stable and projected to grow), as well as a specific focus on innovation and patents.  Nokia will retain their patent portfolio and license it back to Microsoft for 10 years.  The deal is said to be for 5.44 billion euros ($7.2 billion), with $2.2 billion of that specifically for the patent license agreement.

This deal will close in Q1 2014 pending shareholder and regulatory approval.