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Microsoft brings Nokia Device Team on Board with $7.5billion

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Microsoft has finally added the Nokia Device team on board the new ‘mobile first cloud first’ strategy of the new Chief Executive Satya Nadella.

When the deal was announced, it seemed as if it might scuttle Microsoft’s strategy of having other phone manufacturers make devices that run its operating system. But it is not giving up that idea. One reason Microsoft may have been slow to catch on is it wanted device manufacturers running Windows to pay Microsoft. But the company recently said it would stop charging licensing fees to manufacturers of devices with screens smaller than 9 inches. This covers some tablets and all smartphones (although if people’s tastes for huge phones continue to grow, who knows whether it always will).

By forgoing licensing revenue for scale, Microsoft is mimicking Google’s approach to the mobile market. Google (GOOG) provides the Android operating system free to all comers, in hopes of recouping the value through advertising and other indirect means. Microsoft is working on its own flavor of this approach, according to Nadella. “We have monetization wrinkles on the back end,” he said in a call with analysts on Thursday, “because in a world of ubiquitous computing, we want Windows to be ubiquitous.”

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