In a single week just under three months after his appointment as CEO, Satya Nadella has both sealed the deal for Microsoft’s acquisition of iconic brand Nokia and given a successful earnings call.
The week’s news out of Redmond has displayed a positive outlook and growth for one of the world’s most famous brands, but one which is often criticised under the microscope in regards to being “late” to get a grasp on mobile devices.
Under the new deal, Nokia’s talent will merge with the company to form a new Microsoft Devices division. It completes the transition from Microsoft’s traditional model of a software giant to becoming one of a hardware giant alongside increasingly popular devices like the Surface.
In yesterday’s earning call, Nadella revealed Surface sales have seen a 50% growth over the same period last year and now account for $500m (£300) in revenue. Over the Christmas period sales reached $893m in revenue.
Industry observers will be watching with intrigue whether Nokia will have any influence on the Surface going forward. Perhaps we’ll see some of Nokia’s now infamous colours come to Microsoft’s tablet and hybrid PC? Is there a market for a Cyan Surface 3?
Microsoft has paid €3.79 billion for Nokia’s phone making business, plus another €1.65 billion to license its portfolio of patents. That’s a total of €5.44 billion (around $7.2 billion) which is a lot less than the $8.5 billion Microsoft paid for Skype back in 2011.
For this, Microsoft now has the ability to release both hardware and software in the same respect as rival Apple – who boast their “synergy” between devices and the OS which runs upon it.
“Today we welcome the Nokia Devices and Services business to our family. The mobile capabilities and assets they bring will advance our transformation,” said Microsoft CEO Satya Nadella. “Together with our partners, we remain focused on delivering innovation more rapidly in our mobile-first, cloud-first world.”
The acquisition marks the next-step in the “mobile-first, cloud-first” vision being pushed by New Microsoft. Office for iPad was the first move towards this with Nadella at the helm. At the earnings call, Nadella promised: “what you can expect from Microsoft is courage in the face of reality.”
“Nearly everything we do will become more digitized,” he said. “It’s a rich canvas for innovation and a great growth opportunity for Microsoft.”
Microsoft’s Cloud platform, Azure, seen the biggest rise in revenue with a 150% growth. Office 365 subscriptions grew by 100% and now equates for 4.4 million subscribers.
“We saw strong momentum in cloud services. Our commercial cloud business more than doubled year-over-year, with Office 365 and Azure both performing extremely well,” said Nadella.
Some impressive statistics were released about the company’s recent console, the Xbox One, with the most being that the average user spends 5 hours on it per day. With the new console Microsoft added in features which enable it to act as a set-top box and control your home entertainment set-up for a more interactive TV experience.
Summed up, Microsoft’s powerful assets are doing well and the company is still bringing in huge profits. The challenge remains to attract Windows developers. Microsoft has already started to woo them with the promise of the first single development platform to release across devices; desktop, tablet, mobile, and console.
What do you think about Microsoft’s earnings call and Nokia acquisition? Let us know in the comments.
