WHAT ARE THE PRO’S AND CON’S OF MICROSOFT ACQUISITION OF NOKIA?
Answer by Nat Burgess:
The $7.2 billion identity crisis; should MSFT be a hardware company, a software company, or both? Selling software at 90%+ margins to drive low margin hardware created by third parties is the model that turned MSFT into the behemoth they are today. That model won’t work any more; the “computing” experience is commoditized, and customers now make purchase decisions based on innovation and integration on the hardware platform itself. If we accept this as fact, then the Nokia acquisition delivers a mission-critical “pro”; for less than they paid for Skype, MSFT gets one of the world’s best mobile hardware teams. Note also that over 70% of MSFT cash is held offshore and would be taxed if repatriated. This effectively gives them a built-in discount when they acquire offshore assets like Skype and Nokia.