Microsoft explains why it bought Nokia [slides]

So by now you most likely know that Microsoft has bought Nokia’s devices and services division for US$7.17-billion, bringing CEO and former Microsoft man Stephen Elop back into the fold as part of the deal.

And while Elop might seem like a fairly strong potential candidate to take over as CEO of the Redmond-based giant upon Steve Ballmer’s retirement next year, that’s not exactly solid grounds for buying what is still a fairly substantial mobile phone company.

So why exactly did Microsoft make the purchase? Well, as it explains in this presentation, the answer is multifold.

Among the reasons it provides for the massive purchase are:

• Accelerating phone and profit share: The two companies have an established relationship now and the emergence of solid entry-level Lumias could help Microsoft consolidate on the third place it currently occupies in the mobile OS wars.
• Provide increased opportunity to partners: This might seem counter-intuitive at face value, but Microsoft reckons that the deal will help it better integrate its services across a wide range of devices. This in turn, it says, strengthens both Microsoft and its manufacturing partners.
• Providing stronger competition to Google and Apple: The logic is fairly simple here. Microsoft reckons it can compete better with Google and Apple if it has Nokia under its belt. The thing about competition is that more interests don’t always equal more competition. The competition has to be strong too. If Microsoft can leverage Nokia’s plan to bring the next wave of smartphone adopters then it could once again be a serious player.
• Patent benefits: If nothing else, Nokia is an innovator and the buyout allows Microsoft to license its patents in areas such imaging, mapping and connectivity

Check out the full presentation below:

StrategicRationale