Microsoft Corporation (NASDAQ:MSFT)’s Mistake Costs $7.5 Billion

Microsoft Corporation

Microsoft Corporation (NASDAQ:MSFT) lost $7.5 billion on the Nokia deal. The company now rates a business that once had 41% of the worldwide handset market at a small percentage of the buying price. Mainly because of the Nokia Corporation (ADR) (NYSE:NOK) deal, Microsoft had its biggest quarterly loss ever. Incidentally, this was only Microsoft’s third loss in its track record.

Microsoft’s chief executive Satya Nadella should be commended for facing the reality he inherited. Incidentally, Nadella had opposed the deal during Steve Ballmer’s tenure.

In any other industry, the acquisition would be considered as a disaster, as per Horace Dediu, who earlier served eight years at Nokia.

Frank X. Shaw, the software giant’s spokesperson said that it was usual for internal debates to happen regarding major acquisitions. Still, it’s uncommon for dissent to occur after a deal is struck.

Google Inc (NASDAQ:GOOG) and, Inc. (NASDAQ:AMZN) had similar experiences as Microsoft’s. However, Microsoft lost much more than them.The main logic of the Nokia deal was to bolster the Windows OS, a vital element in the company’s mobile strategy.

Now the handset business has Google and Apple Inc. (NASDAQ:AAPL) ruling over software and Samsung and Apple presiding over hardware. Microsoft has however abandoned the strategy.

Microsoft’s objective was to have an individual platform that operated on all devices. Dediu opined that it was unfair to put the whole burden of the blame on Microsoft as several others had failed likewise. However, it’s hard to imagine that company of the stature of Microsoft had made such a substantial mistake.

Shaw commented that Microsoft was taken aback by the pace of changes in the industry. He also said that things always looked different when looked at a later point in time.

Microsoft has now started what Nadella described as the reinvention of the organization. Nadella said that the reinvention would be focused on generating mobility of experience across the spectrum of devices. Consequently, Microsoft is banking on its new OS, Windows 10 to reverse its fortunes.