Think of Microsoft 's $7.2 billion deal for Nokia's handset business as a sporty, midlife-crisis marriage whose outcome could determine the success of the company's future in mobile .
Already partnered with Nokia, Microsoft has forged a growing No. 3 position for Windows Phone 8 inside the Finnish phone maker's smartphones, only behind software from Google and Apple. The two companies can now form a compelling tablet and smartphone combination with the heft of Microsoft's many services, say tech analysts.
Microsoft's overall outlook has been dimmed with the runaway success of mobile devices as consumers drift away from desktop computing . But that could change with deeper integration of Nokia. Reports persist, for instance, that Microsoft and Nokia could launch a 10-inch tablet, priced on par with Apple's iPads, that resembles the colorful Nokia Lumia smartphones.
With sales of tablets and smartphones on track to outpace personal computers, Microsoft needs a few mobile hits to keep its software driving computing devices of the future. Lumia-type tablets and smartphones could give Windows software a new life and Office a tablet home. Or the deal could seal Microsoft's fate as a bureaucratic behemoth unable to adapt.
The big "if" is how quickly and intuitively Microsoft's gadgetry can be delivered and whether it can gain a toehold in the tablet arena. Another question is whether Microsoft will be ready for the next wave of so-called wearable computing.
"Consumers do not see Nokia as sexy anymore, and consumers do not see Microsoft as sexy," says Gartner analyst Carolina Milanesi.
Still, the acquisition announced late Monday cements a bond between the third-largest smartphone operating system and the second-largest seller of mobile phones worldwide.
Under the deal, Microsoft is paying $5 billion to buy Nokia's Devices & Services unit and an additional $2.2 billion to license Nokia's patents.
The move comes as the two companies have struggled to gain meaningful market share in smartphones and as Microsoft has hit reboot on its leadership. CEO Steve Ballmer plans to retire within the next 12 months. The deal will swing Nokia CEO Stephen Elop -- a former top Microsoft exec -- back into the fold as a possible heir apparent at the software giant where he once worked. (continued...)
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