Steve Ballmer, chief executive officer of Microsoft Corp., right, and Stephen Elop, chief executive officer of Nokia Oyj, shake hands after a presentation of the new Nokia Lumia 920 smartphone at a news conference in Moscow on Nov. 6, 2012.
Microsoft Corp. agreed to buy Nokia Oyj’s handset business and license its patents for 5.44 billion euros ($7.2 billion), casting together the lot of two companies trying to stay relevant against fleet-footed technology rivals.
The deal changes the nature of both companies. Nokia is exiting from the mobile-phone business it once dominated, leaving it mainly as a network equipment maker. Microsoft, which became the world’s largest software maker on the back of its Windows operating system, is moving aggressive into hardware.
Steve Ballmer, chief executive officer of Microsoft Corp., right, and Stephen Elop, chief executive officer of Nokia Oyj, shake hands after a presentation of the new Nokia Lumia 920 smartphone at a news conference in Moscow on Nov. 6, 2012. Photographer: Alexander Zemlianichenko Jr./Bloomberg
Sept. 3 (Bloomberg) — Microsoft agreed to pay 5.44 billion euros ($7.2 billion) for Nokia’s devices business and license patents as the Finnish company, once the biggest maker of mobile phones, struggles to maintain market share. Mia Saini reports on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)
Pedestrians pass a giant smartphone in the window display of a Nokia Oyj store in Helsinki. Photographer: Henrik Kettunen/Bloomberg
A customer inspects a Nokia Lumia 900 smartphone from a display inside a mobile phone store in Helsinki. Photographer: Ville Mannikko/Bloomberg
Steve Ballmer, chief executive officer of Microsoft Corp., right, reacts while holding the Nokia Lumia 920 smartphone with Stephen Elop, chief executive officer of Nokia Oyj, at a news conference in Moscow on Nov. 6, 2012. Photographer: Alexander Zemlianichenko Jr./Bloomberg
Nokia shares jumped as much as 48 percent in Helsinki trading. Microsoft is making its biggest foray yet into hardware as sliding personal-computer sales threaten the demand for Windows, and Nokia’s cash flow has been weakened as it loses market share to Apple Inc.’s iPhone and Google Inc.’s Android platform. While Microsoft Chief Executive Officer Steve Ballmer and Stephen Elop, his Nokia counterpart, called the deal a “moment of reinvention,” analysts aren’t so sure of its prospects.
“Both Nokia and Microsoft really missed the boat in terms of smartphones, and it is extremely difficult to claw your way back from that,” said Paul Budde, a Sydney-based telecommunications consultant. “The question is whether combining two weak companies will get you a strong new competitor. It’s doubtful.”
Microsoft will pay 3.79 billion euros for Nokia’s devices unit and 1.65 billion euros for patents, according to a statement from the companies.
Nokia climbed as much as 1.44 euros to 4.40 euros and traded 45 percent higher at 4.30 euros as of 10:05 a.m. in Helsinki, giving the company a market value of 16.2 billion euros.
With the deal, Microsoft becomes the last major developer of smartphone operating systems to get into the manufacturing business. Apple makes its own handsets, which use its iOS operating system. Google acquired Motorola Mobility last year for about $12.4 billion, giving the company its own lineup of phones.
Yet the deal also raises questions as to whether Microsoft and Nokia will prop each other up or weigh each other down. Microsoft’s other recent significant move into hardware, the Surface tablet, sold below expectations so that it had to take a charge to write down inventory last quarter.
The deal also brings Microsoft’s CEO succession into the spotlight. As part of the purchase, Elop — formerly a Microsoft executive — will return to the Redmond, Washington-based company. Ballmer declined to say whether Elop would now become, or had already been, a candidate to succeed him as CEO.
Chairman Risto Siilasmaa will become interim CEO of Espoo, Finland-based Nokia. About 32,000 Nokia employees will also transfer to Microsoft. The devices and services business generated about 50 percent of Nokia’s net sales during 2012, worth an estimated 15 billion euros, the companies said.
The deal is the largest for a wireless device maker after Google’s purchase of Motorola’s handset unit completed in May 2012, according to data compiled by Bloomberg.
Microsoft agreed to pay about 0.35 times annual revenue compared with the median of about 1.4 times for 60 wireless equipment-maker deals tracked by Bloomberg. That also compares with the 0.77 times revenue Google paid for Motorola Mobility, the data show.
Google paid about 1.3 times annual operating income for the handset maker, while Nokia’s device and services business reported an operating loss last year, according to the data.
Ballmer called Nokia chairman Siilasmaa shortly after the new year to initiate discussions on an acquisition and the two met in February at tradeshow Mobile World Congress, according to a Microsoft spokesman. Talks heated up in recent months and a deal was completed before Ballmer announced his retirement last month, he said.
For Microsoft, the deal including the payment to license Nokia’s patents is its second biggest behind the $8.5 billion purchase of Internet telephony company Skype in 2011.
Microsoft will face a balancing act owning Nokia and keeping its other hardware partners, including HTC Corp. and Samsung Electronics Co., committed to its Windows Phone. Aiming to reassure other phone makers that Microsoft will still support them, Ballmer said today that the company was “100 percent” committed to helping its manufacturing partners.
The deal also pushes Microsoft into manufacturing facilities and workers, an area outside its expertise. The company has relied on contract manufacturers for products like Xbox, Surface and the chips in the Kinect motion sensor. It’s an area that has proved challenging for Google since acquiring Motorola as well.
After the sale to Microsoft, Nokia’s biggest business will be its unit selling wireless-network equipment to mobile-phone carriers, called Nokia Solutions and Networks. The unit has struggled amid intensifying competition from Sweden’s Ericsson AB and China’s Huawei Technologies Co. and ZTE Corp. The NSN division started a program in late 2011 to cut 17,000 jobs, or about 23 percent of its total.
Nokia said it will also keep its mapping and location services business, called Here, and its technology development and licensing division.
“After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders,” Chairman Siilasmaa said in a statement.
Microsoft and Nokia have had a close relationship through Elop, who had run Microsoft’s Office unit. He left the software maker in September 2010 to take the top job at Nokia.
At the time, Elop likened his company’s mobile position to a man standing on a burning oil platform on the verge of being engulfed in flames, facing the option of staying aboard or jumping to the ocean to have a chance to survive.
In February 2011, Elop struck a deal with Ballmer to switch Nokia’s smartphones from its own Symbian operating system to Windows Phone. In exchange, Microsoft ponied up more than $1 billion dollars to pay for Nokia marketing and developing products on Windows.
Yet Nokia has lost more than 5 billion euros in nine quarters as Elop’s comeback bid hasn’t reversed market-share declines. Nokia’s basic phones are losing users to Chinese rivals and new smartphones have failed to stop shoppers from picking up Samsung and Apple devices.
Nokia had the largest share of the mobile phone handset market until it was overtaken by Samsung in 2012, according to data compiled by Bloomberg.
Still, Nokia remains a top seller of traditional mobile phones — models that are more popular in developing markets. In total phone shipments, the company ranks second to Samsung among device manufacturers. Samsung accounted for 26 percent of shipments last quarter, while Nokia had 14 percent. Apple came in third with 7.2 percent.
In January, Elop suspended the company’s dividend in an attempt to improve its finances. Nokia reported in July a 27 percent drop in the number of handsets sold in the second quarter.
Nokia and Microsoft previously discussed Microsoft buying the handset business and made progress before talks faltered, The Wall Street Journal reported in June.
Some analysts applauded the deal. “Nokia has a highly evolved device design and manufacturing process which will benefit Microsoft greatly,” said Al Hilwa, an analyst at research firm IDC. “This is simply the fastest path in front of Microsoft to achieve something like Apple’s vision on devices.”
In total, Android accounted for 79 percent of the global smartphone shipments last quarter, followed by Apple’s iOS with 13 percent, according to IDC. While Microsoft’s Windows Phone had just 3.7 percent of the market, it was the fastest-growing operating system during the period.
Microsoft said it is confident of getting the deal approved by early 2014. The transaction will shave 12 cents a share, or 8 cents excluding some items, off earnings in the current fiscal year, Microsoft said in a slide deck. In 2015, the cost will be 6 cents based on generally accepted accounting principles. Excluding some costs, the deal will add to profit that year.
To break even on an operating basis, Microsoft will need Nokia to sell about 50 million smartphones a year, the company said in the slide presentation. Nokia currently has a run-rate of about 30 million units.
The agreement allows Microsoft to bring in more money, more than $40 a unit for smart devices, compared to the less than $10 in gross profit that the company currently gets for every Windows Phone sold by Nokia, Microsoft said in the slide show. That’s before the costs of developement and marketing, however.
Microsoft said the transaction will add to earnings that comply with generally accepted accounting principles in fiscal 2016. The company expects to have annual cost synergies of $600 million about 18 months after the deal closes.
“It’s a bold step into the future — a win-win for employees, shareholders, and consumers of both companies,” Ballmer said in a statement. The deal will “accelerate Microsoft’s share and profits in phones,” he said.
72% OF GLOBAL 5G SMARTPHONE REVENUE COMES FROM CHINA
Counterpoint Research reported that in the second quarter of 2020, 5G smartphone shipments increased, accounting for 10% of global smartphone shipments.
REVENUE AND ASP OF 5G SMARTPHONE
In the second quarter of this year, 5G smartphone revenue accounted for 20% of global smartphone revenue. Among them, China is the largest contributor to 5G smartphone sales. It is reported that 72% of global 5G smartphone revenue comes from China. Most of them comes from 5G smartphones released by Huawei. In addition, the average selling price of the Chinese smartphone market also increased by 12% year-on-year.
According to the report, the Asia-Pacific region, China, Europe, the Middle East and Africa, North America and other regions contributed 10% of the overall growth rate in the average sales price in the second quarter of 2020. However, Latin America is the only country where average sales prices have fallen 5% year-on-year. Although the new coronavirus has had an impact on the entire market, the high-end segment has not fallen sharply. Compared with the overall market decline, it only faces a year-on-year decline of 8%.
The report also shows that in the second quarter of 2020, the average selling price (ASP) of the global smartphone market increased by 10% year-on-year. With the exception of Latin America, average selling prices increased in all regions. This is because many 5G phones sold well in the second quarter. The increasing demand for education, work, games, and entertainment is also a factor in users’ preference for high-end smartphones.
Overall, due to the economic impact and the closure of offline retail stores, the market’s demand for low-priced devices has decreased. Coupled with the resilience of the high-end market and the growth of 5G smartphone sales (especially in China), this quarter’s increase in the average selling price of smartphones.
THE BOTTOM LINE
At the same time, smartphone shipments fell 23% year-on-year, reaching a record high. Although most OEM’s smartphone shipments declined in the second quarter of 2020, Apple’s shipments increased by 3% year-on-year, while iPhone revenue increased by 2% year-on-year. But we should also point out that Apple still has no 5G iPhone. The first models will come to the market only this year. Once this happens, and 5G appears on lower models, it will be quite interesting to see how the proportion changes.
Former Blizzard CEO Mike Morhaime announces new game company
Two years after stepping down as CEO at Blizzard, the game company he co-founded in 1991, Mike Morhaime is back with his next venture. It’s called Dreamhaven, and it’s a combination of a publisher and developer, with “a common goal to empower creators, help bring their ideas to life, and create original gaming experiences that foster meaningful connections between players.”
As part of the announcement, Dreamhaven also revealed its first two internal studios: Moonshot Games and Secret Door. Moonshot is headed by a trio of Blizzard veterans, including former Hearthstone lead Jason Chayes, StarCraft II director Dustin Browder, and Hearthstone creative director Ben Thompson. “Though it’s very early days, when we think about Moonshot, we imagine a studio that celebrates curiosity and courage,” Chayes said in a statement. “We aspire to be bold in our approach, and we think the best way to do that is to create a culture centered around trust.”
Secret Door, meanwhile, is similarly led by a team of former Blizzard developers, including Chris Sigaty (executive producer on Hearthstone), Alan Dabiri (technical director on Warcraft III and StarCraft II), and Eric Dodds (designer on World of Warcraft and Starcraft). No projects have been announced for either studio.
Morhaime stepped down as CEO of Blizzard in 2018, though he stayed on in a consultancy role until last year. In an interview with The Washington Post, he said that one of the goals of the new company was to build an environment focused on creators — something that was likely a challenge under Activision, which became Blizzard’s parent company in 2008.
“We’ve learned a ton about what goes into creating an environment that allows creators to do their best work, and we were very successful doing that for many years at Blizzard,” Morhaime told the Post. “We reached a crossroads where we reassessed what we want to do with the rest of our lives.”
Apple Loop: Shock iPhone 12 Details, Massive iOS 14 Problems, Macbook Pro Delay
Taking a look back at another week of news and headlines from Cupertino, this week’s Apple Loop includes surprising iPhone 12 benchmarks, big problems with iOS 14, two new iPads, Apple ignores MacOS, the “good/better/best” of the Apple Watch, the controversy around Apple One, and the Macs’ never changing system System Preferences.
Apple Loop is here to remind you of a few of the very many discussions that have happened around Apple over the last seven days (and you can read my weekly digest of Android news here on Forbes).
Just How Fast Is Your Next iPhone?
We might not have seen the iPhone 12 family as part of Apple’s virtual September launch event this week, but we have seen the benchmarks pop up on the AnTuTu website. That gives us a raw comparison of the numbers from last year’s iPhone to this year’s. Philip Michaels reports some pretty shocking numbers:
“Leaked benchmarks from Antutu, purportedly showing off an iPhone 12 Pro Max’s performance, may help fill in some of the blanks. MySmartPrice spotted the leaked numbers, which claim to show off a device with 6GB of RAM and 128GB of storage running iOS 14.1.
“According to the leaks, the iPhone 12 Pro Max tallied a score of 572,333 on Antutu’s test, which is a 9% gain over the iPhone 11 Pro Max’s 524,436 result on the same test. MySmartPrice says the iPhone 12 Pro Max’s reported tally would be the highest score ever posted by an iPhone, which you’d hope given that it’s a new model.
The Big Problem With iOS 14
Apple may not have announced a release date for the iPhone, but it did announce the release date of iOS 14. And that has caused problems. Normally Apple will provide a week’s worth of ‘heads up’ time to Developers so they can ensure their apps are ready for the jump up to the next major version of iOS. Not this year… developers had less than a days notice, and they are not happy. Matt Binder reports:
““Gone are the hopes of being on the store by the time users install the new iOS 14 and are looking for new apps. Gone is the chance to get some last-minute fixes into your existing apps to make sure they don’t stop working outright by the time users get to upgrade their OS,” explained Steve [Troughton-Smith from High Caffeine Content.”
““There are some developers who have spent all summer working on something new, using the latest technologies, hoping to be there on day one and participate in the excitement (and press coverage) of the new iOS,” he continued. “For many of them, they’ll be incredibly upset to have it end like this instead of a triumphant launch, and it can dramatically decrease the amount of coverage or sales they receive.””
Take Two Tablets And Call Your iPhone In The Morning
Taking the flagship spot away from the ‘missing presumed having a good time’ iPhone 12 was Apple’s new iPad Air. Beating the smartphone as the first device with Apple’s new A14 ARM-based processor. Samuel Axon and Jim Salter report for Ars Technica:
“The iPad Air gets the new A14 Bionic CPU, built on 5nm process technology. It’s a six-core CPU with two high-performance cores and four lower-power, more efficient cores for simpler background tasks. The A14 Bionic offers a 30 percent GPU performance boost compared to previous generations, and Apple says it puts up double the graphics performance of typical laptops.”
As well as the increased power, 2020’s iPad Air has a new design; USB-C has been added, the bezels have been trimmed away, the home button has been removed, and TouchID has been integrated into the power button. It;s not the only new iPad, as the entry-level iPad moves up rom the A10 to the A12 Bionic processor. Benjamin Mayo reports:
“The jump from A10 to A12 means Apple’s cheapest iPad will feature the Neural Engine for the first time. Apple says the A12 chip offers more than twice the performance of the top selling Windows laptop, 6x faster than the top-selling Android tablet and 6x faster than the best-selling Chromebook.
“The 8th-generation iPad keeps the same price as the 7th-gen: that’s $329 for general sale and $299 for education.”
Will Mac Owners Be Satisfied With Safari After macOS Delay?
If you were waiting for MmcOS Big Sur to drop for your Mac or MacBook, then you are out of luck. Apple’s event saw updates to iOS, iPadOS, tvOS, and watchOS… but macOS has been delayed. The ‘Big Sur’ release is still in the future, but a small crumb (perhaps from a cookie) has been handed to Mac fans in the form of Safari 14, presumably to offer cross-OS support with other devices. Juli Clover reports:
“Safari 14 brings improved performance, customizable start pages, a Privacy Report to see which cross-site trackers are being blocked, and a new tab bar design that provides tab previews so you can see what you have open at a glance. Today’s update also removes Adobe Flash.”
The Apple Watch Strikes Three
Two new Apple Watch models were launched, and as the Apple Watch Series 3 remains, there is now a low-, a mid-, and a high-level smartwatch in the classic triplet that Apple was once famous for. Todd Haselton looks over the Series 6 Apple Watch for CNBC, including the headline ‘wellness’ features:
“The Series 6 also has Apple’s most advanced sensors. You can run the ECG app for an electrocardiogram, for example, a feature that’s not on the Apple Watch SE or Series 3. It’s also the only model with the new blood-oxygen app. I tried that and it told me my blood oxygen was 96%, which seems good.
“…Apple is careful to explain that this isn’t a medical device. You can use it if you’re curious about your blood oxygen when you’re hiking at high altitudes, but Apple isn’t making any promises about detecting low oxygen should you fall ill with coronavirus.”
Meanwhile, Apple has brought the ‘SE’ brand to the Apple Watch, again with the promise of a cheaper ‘mid-range’ slice of hardware that still delivers the core Apple experience. Chris Velazco has spent some time with the wearable to try and work out where it fits into the portfolio:
“For one, the SE uses the same S5 system-in-package (or SIP) that we got in last year’s Series 5, which in turn contains the same dual-core processor as the Series 4. Meanwhile, Apple has confirmed that the SE has the same compass and always-on altimeter as the Series 6, along with a very similar screen.
“From what I can tell, it’s the same bigger display we got in the Series 5, just without the always-on functionality enabled. And while the Series 4 was the first Apple Watch to come with heart-sensing ECG support, you simply don’t get that here. Ditto for the Series 6’s new blood oxygen measurement features.”
Bouquets and Brickbats For Apple One
Also announced alongside Apple’s hardware, and perhaps an indication of where Apple wishes to focus on the future, were new options for the various subscription services offered by Cupertino. Apple One takes the popular options and bundles them together while offering a discount. Brian Heater reports:
“It’s not quite mix and match yet, but there are three pricing tiers. Individual offers Apple Music, TV+, Arcade and iCloud for $15 a month. The Family version will get you those four services for $20 a month. For the hardcore, there’s the $30 a month Premier tier, which bundles iCloud, Music, TV+, Arcade, News+ and [the new service] Fitness+.“
“For those who have been putting off a given Apple subscription, such a bundle could certainly sweeten the pot — and make it even harder for users to escape the pull of the Apple software ecosystem.”
More at TechCrunch. Given Apple’s market position, using one service to pptentiallybolster another through a bundle has drawn the eye of the competition. Spotify – which has already filed an anti-trust complaint with the European Commission against Apple – drew attention to the issue shortly ager the end of the event.
“Once again, Apple is using its dominant position and unfair practices to disadvantage competitors and deprive consumers by favoring its own services. We call on competition authorities to act urgently to restrict Apple’s anti-competitive behavior, which if left unchecked, will cause irreparable harm to the developer community and threaten our collective freedoms to listen, learn, create, and connect.”
The look of the MacOS user interface has evolved since OSX was announced in 2000. One area has stayed relatively contestant, but the small changes highlight the thinking behind the OS over the years.
“The interface started glassy and skeuomorphic, mimicking the materials used on Macs. Over the decades, it went through significant revisions. One thing that seems to have remained relatively unchanged over the years is the System Preferences screen.
“But, at a closer glance, we’ll see that this mundane part of the operating system has changed quite a bit and hides some fun easter eggs and surprises.”
Apple Loop brings you seven days worth of highlights every weekend here on Forbes. Don’t forget to follow me so you don’t miss any coverage in the future. Last week’s Apple Loop can be read here, or this week’s edition of Loop’s sister column, Android Circuit, is also available on Forbes.
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