What was meant to be a strategic partnership between two technology giants turned into one of the most notorious acquisition failures in corporate history. In 2013, Microsoft announced its acquisition of Nokia’s mobile phone business for $7.2 billion, hoping to strengthen its position in the smartphone market. Yet within just a few years, the partnership had collapsed: Microsoft wrote off nearly the entire value of the deal, laid off thousands of employees, and effectively abandoned its smartphone business.
Background
By the early 2010s, Microsoft and Nokia were established leaders in their respective industries.
Microsoft, founded in 1975, is one of the world's largest technology companies. It is best known for developing the Windows operating system, the Microsoft Office suite, and the Azure cloud platform. By the early 2010s, Microsoft held a dominant position in the software market but had struggled to establish a significant presence in the smartphone industry.
Nokia, a Finnish company founded in 1865, evolved from a pulp mill into a major manufacturer of telecommunications equipment and mobile phones. By the late 1990s, it had become the world's largest mobile phone manufacturer. However, following the introduction of the iPhone and Android-based devices, Nokia began rapidly losing ground in the smartphone market.
By the early 2010s, both companies faced growing pressure to rethink their strategies. Microsoft needed a strong mobile device manufacturer to help build a competitive smartphone ecosystem. Nokia, meanwhile, was looking for a way to maintain its market presence as its Symbian operating system increasingly struggled to compete with newer platforms.
In 2011, the two companies formed a strategic partnership, with Nokia adopting Windows Phone as the primary operating system for its smartphones. However, the partnership failed to deliver the expected results: despite some growth in Lumia smartphone sales, Nokia continued to struggle, while Windows Phone captured only a small share of the global smartphone market.
Against this backdrop, acquiring Nokia's mobile phone business became an opportunity for Microsoft to strengthen its position in the mobile market, while allowing Nokia to shift its focus toward its telecommunications business.
The Acquisition
Key Deal Details:
• Acquirer: Microsoft Corporation.
• Acquired Business: Nokia’s Devices & Services division, responsible for developing and manufacturing mobile phones and smartphones.
• Announcement Date: September 3, 2013.
• Completion Date: April 25, 2014.
• Deal Value: €5.44 billion (approximately $7.2 billion at the exchange rate at the time of the announcement).
• One factual nuance: The €5.44 billion total consisted of approximately €3.79 billion for Nokia’s Devices & Services business and €1.65 billion for patent licensing. Therefore, the entire amount was not paid solely for the mobile phone division.
• What Microsoft Acquired: Nokia’s mobile phone business, manufacturing facilities, more than 30,000 employees, a 10-year license to Nokia’s patents, and rights to the Lumia brand and several other trademarks.
• What Nokia Retained: Its patent portfolio, the HERE mapping service (later sold to a consortium of German automakers), and its telecommunications equipment business.
The acquisition was Microsoft’s largest deal in the mobile device industry. The company aimed to gain full control over both hardware and software development, build an integrated mobile ecosystem similar to Apple’s, and strengthen its position in the smartphone market.
Why the Deal Made Strategic Sense
From a strategic and financial perspective, the acquisition appeared to offer clear advantages to both companies.
Microsoft
• Global leader in software development.
• Developer of the Windows Phone operating system.
• Strong financial resources and an established product ecosystem.
• Ambition to compete with Apple and Google in the smartphone market.
Nokia
• Globally recognized mobile phone brand.
• Extensive experience in smartphone design and manufacturing.
• Established production facilities and worldwide distribution network.
• Strong engineering expertise and the Lumia smartphone brand.
Expected Benefits
• Creating an integrated hardware and software ecosystem similar to Apple's.
• Strengthening Windows Phone's global market position.
• Leveraging Nokia's manufacturing capabilities and distribution network.
• Reducing costs through integration and economies of scale.
• Accelerating product development by combining technological expertise.
For Microsoft, the acquisition offered an established smartphone business and greater control over hardware and software development. For Nokia, it provided financial resources and an opportunity to focus on telecommunications equipment and network infrastructure.
The Outcome
The acquisition failed to deliver the expected results.
Windows Phone never attracted enough users or app developers to compete effectively with iOS and Android, while integrating the two businesses proved far more challenging than anticipated.
In 2015, Microsoft recorded a $7.6 billion impairment charge related to the Nokia acquisition and announced major layoffs. In 2016, Microsoft sold its feature phone business and effectively withdrew from the smartphone market, bringing its ambitions as a major smartphone manufacturer to an end.
For Microsoft, the deal became one of the most high-profile acquisition failures in tech history. Nokia, meanwhile, shifted its focus to telecommunications equipment and went on to establish a strong position in network infrastructure and 5G technologies.
Источники:
1) Pattak, Dulal Chandra. "An investigation into Nokia-Microsoft Strategic Alliance: Joining forces in the global Smartphone Industry." International Journal of Scientific & Engineering Research, 8 August 2016.
2) https://successacrosscultures.com/2024/07/13/the-microsoft-nokia-deal-a-case-study-in-the-challenges-of-cross-cultural-mergers/ Accessed 27.07.2026
3) Stahl G.K., Mendenhall M.E. (eds.) Mergers and Acquisitions: Managing Culture and Human Resources. Stanford University Press, 2005.
4) Vuori T.O., Huy Q.N. Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle. Administrative Science Quarterly, 2016.
5) Y. Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones. Oxford University Press, 2017.