buying Nokia or not? It's not exactly a new rumor. We've heard it all before. The last time these headlines floated in tech news media we wound up with the Lumia partnership. What now?
According to The Wall Street Journal, Microsoft recently held advanced talks with Nokia about buying its handset business. The Journal cited "people familiar with the matter" in a Wednesday report.
"We have a deep partnership with Microsoft, and it is not uncommon for Nokia and Microsoft to meet on a regular basis," a Nokia spokeswoman told the Journal. Microsoft could not immediately be reached for comment and the paper did not pin down a financial figure associated with the deal.
Would Nokia Help Windows Phone?
Jeff Kagan, an independent telecom analyst, told us if Microsoft's partnership with Nokia on the Lumia phone works -- and it seems to be working -- and if the price is right, Microsoft may want to buy its way into the handset business.
"That would let them compete on a more equal basis with Apple. That would also let Microsoft delve deeper into this converged world," Kagan said. "This would allow Microsoft to build and sell devices that would use their operating system. Those devices could all work together and communicate in special ways and store information to the Microsoft cloud."
Kagan noted that the cloud is becoming more important and, as Microsoft's different business segments start to blend, the lines that separate them are starting to blur. As he sees it, now would be the perfect time for Microsoft to extend beyond its traditional business, and acquiring Nokia could be the ticket to do just that.
It's not clear that getting into the handset business would help Windows Phone, though. According to IDC, Microsoft's operating system only owns about 3 percent of the smartphone market globally as of the first quarter. By contrast, 75 percent of new smartphones use Android. And Nokia accounts for 79 percent of Windows Phone devices on the market.
Would Nokia Fare Better Under Microsoft?
"Nokia is not the strongest business today, as they have been trying to restart their engines," Kagan said. "However, their Lumia devices are good and do stand a chance to be one of the alternatives after Apple iPhone, Google Android and Samsung Galaxy."
On the other side of the coin, Kagan said, the partnership between Microsoft and Nokia has not blown the doors off, but it has proven the two companies can work well together. Perhaps if they were both under the same roof they could ratchet up their growth engines.
"For now," Kagan said, "we'll just have to watch and wait and see what happens next."