Are Microsoft getting a good deal with the purchase of Nokia?

My favourite stat to come from the Microsoft takeover of Nokia has to be the increase in share value of 30% for Nokia and the decline in share value of Microsoft of 5% on the same day the purchase was announced. But does this stat demonstrate a flawed strategy for Microsoft in looking to purchase the Finnish brand?

http://www.bbc.co.uk/news/business-23940171

Nokia has suffered a long, drawn out and deflating battle against the other mobile phone providers ever since 2003. In the last ten years its market share in the UK alone has declined from 35 % to 14%. In a world where the mobile phone transformed into a camera, MP3 player, Internet provider and lifestyle icon Nokia’s approach was just too slow and too responsive to protect its position. The decline should be a stark warning to all other brands of the dangers of taking your eye off the ball. Brands like Nokia who once enjoyed such a dominant position in the market should not experience such a dramatic and rapid fall from grace. There is a clear worldwide trend of switching from mobile to smartphone technology and Nokia just couldn’t keep up with this in the US, Europe and UK.

http://www.ft.com/cms/s/0/224e0784-1483-11e3-a2dfz00144feabdc0.html#slide0

A lot has been said about the impact Apple had on the US and UK market and how their love of disruptive innovation led to a decline in sales for all the big players in the market. No one will ever be able to deny the success Apple had in this field and the competitive advantage they built through creating such a strong and transferable brand image. However at the same time I hope that the ones who made the choices and decisions in Nokia towers do not use this as an excuse for their rapid decline. When the going got tough Nokia pure and simply had no answer to combat the entrance of Apple into the mobile market and no protection strategy to fend off the technology monster.

It may surprise some to know that up until 2011 Nokia was still one of the most popular brands in the UK. Brand index scores suggest that there was still value to be seen in the brand especially in the Western World whereas the US has tended to remain rather indifferent.

http://www.brandindex.com/article/nokia-gets-patchy-reception-across-world

Why is this important? Well first of all it demonstrates exactly why Microsoft are willing to spend billions of dollars in purchasing the brand. Microsoft clearly see the value in acquiring a company which can still boast of being the second largest mobile phone provider in the world. Nokia’s position in the mobile market also provides a clear indicator of Nokia’s strength in the ever-expanding Chinese market. Add this to the fact that Microsoft worked closely with Nokia on the Lumia and all of a sudden a number of possibilities for future growth and brand prosperity once again seem possible for a mobile phone arm of Microsoft’s business.

http://www.forbes.com/sites/timworstall/2013/09/08/the-real-reason-microsoft-bought-nokia-transaction-costs/

So is Microsoft making the right decision with the acquisition of Nokia and does this purchase spell the end of the best thing to come out of Finland? Well on one hand Nokia have experienced significant market decline and have done little to strengthen their product offering or brand perception. However we must also consider that the brand still enjoys a dominant position in the mobile market and a strong market position in China. If Microsoft can leverage the value left in the brand name and focus growth around dominance in China we may not have seen the last of Nokia and ‘snake’ yet.