Please ensure Javascript is enabled for purposes of website accessibility

Another Painful Reminder of Microsoft's Bungled Nokia Acquisition

By Andrew Tonner - Mar 18, 2016 at 7:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Microsoft can't seem to shake the ghosts of failed acquisitions past as a recent bit of bad news helps reiterate.

Image source: Microsoft

Though it's admittedly a subjective list, Microsoft's (MSFT 1.18%) $7.2 billion purchase of Finnish telecom giant Nokia's crumbling handset business  will likely go down as one of the worst acquisitions in the tech industry's history.

Just how bad was it?

Just slightly over one year after its April 2014 purchase announcement, Microsoft wrote down the value of its Nokia handset division by $7.6 billion . For those scoring at home, that is not a typo. Microsoft actually wrote its Nokia acquisition down for more than its original purchase price. Face-palm. Epic fail. 

And while Microsoft's mobile strategy has certainly improved to a fair degree under the company's new leadership, it just received a bit of bad news that brings to light old scars from this historically bad buyout.

Here today, gone tomorrow
According to recent reports, Microsoft's Windows Phone ecosystem will lose support of its main mapping technology over the course of the next two months. Microsoft has licensed its mapping software from Here, the mapping data provider formerly owned by Nokia, rather than licensing it from key mobile rivals like Alphabet or Apple.

Image source: Here.

According to the company, Here will pull its applications for Windows 10 by the end of March. Furthermore Here will fully discontinue updating its apps for all Microsoft Lumia smartphones no later than June 30, effectively removing what had become the primary mapping technology for all Windows mobile devices from the platform. According to Here spokesperson Pino Bonetti, "To continue offering the HERE apps for Windows 10 would require us to redevelop the apps from the ground up, a scenario that led to the business decision to remove our apps from the Windows 10 store." At the same time, though, this shouldn't necessarily come as a complete surprise for those who follow the space closely.

Last August, Nokia sold Here to a consortium of auto makers including Audi, BMW, and Mercedes for $3 billion, ostensibly to help further their combined autonomous driving efforts, in which proprietary mapping technology is seen as a key strategic asset. As such, the abrupt public severing of ties between Microsoft and Here is more likely a result of the product development ambitions of the above German automakers rather than a souring of relations between Microsoft and Here. Either way, the news again exposes deficiencies in Microsoft's mobile offerings the company would otherwise have you forget.

Ghosts of acquisitions past
Though Windows 10's seamless cross-device functionality marked a major win for Microsoft when it launched last year, the cold truth remains that Microsoft is a bit player at best in mobile, while Apple and Alphabet are virtual locks to control this new computing paradigm for the long term. Case in point: Research company IDC estimated that Windows Phone accounted for just 2.2% of global smartphone operating system market share in 2015. 

Image source: Microsoft.

iOS and Android, meanwhile, comprised 15.8% and 81% of the smartphone software market share, respectively. Microsoft's bungled Nokia acquisition represented a last-ditch effort on the part of the Redmond-based software giant to narrow the widening chasm between itself and the two leaders. However, as losing its Here support shows, the acquisition failed to achieve its aims on virtually every front, even in securing a workable mapping platform for Microsoft.

What's more, this is only the latest in a series of major brands that have elected to end support or move away from Microsoft's Windows Phone platform. As was noted by The Verge, companies like American Airlines, Chase, Bank of America, Pinterest, and others have each ceased support for their Windows Phone apps over the course of the past year. Microsoft has already rallied to promise coming improvements to its own mapping apps for Windows Phone. However, it doesn't take much reading between the lines to see which direction the momentum is flowing for Microsoft's mobile products in general.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
$265.61 (1.18%) $3.09
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,165.75 (2.35%) $49.65
Apple Inc. Stock Quote
Apple Inc.
$143.90 (2.40%) $3.38
Nokia Corporation Stock Quote
Nokia Corporation
$5.07 (2.91%) $0.14
Bank of America Corporation Stock Quote
Bank of America Corporation
$36.63 (2.22%) $0.80
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
$129.30 (1.62%) $2.06
Bayerische Motoren Werke Aktiengesellschaft Stock Quote
Bayerische Motoren Werke Aktiengesellschaft
$83.83 (0.76%) $0.64
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$17.34 (7.53%) $1.22
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,172.51 (2.63%) $55.72

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.