Did Microsoft Make a Smart Buy with Nokia?

Risto Siilasmaa, Nokia Chairman and interim CEO, called NokiaEUs fourth quarter a EUwatershed momentEU in the companyEUs history. Some analysts beg to differ.

Sales of the companyEUs flagship Lumia Windows phone dipped in the fourth quarter of 2013, despite the expected boost from the holiday shopping season. ThatEUs bad news for both Nokia and Microsoft, especially considering Redmond has bet $7 billion on NokiaEUs handset business through an in-progress acquisition.

Microsoft is in the middle of acquiring NokiaEUs Smart Devices business unit, including the Lumia brand and products. Lumia handsets have won numerous awards and had grown in sales for three consecutive quarters, with sales reaching 7.4 million units in the second quarter of 2013.

But the story is suddenly changing. NokiaEUs handset revenue declined a startling 29 percent in the fourth quarter of 2013 compared the year-ago period. The report was also a 4.5 percent dip from the previous quarter.

False Sense of Security?

Nick Dillon, a senior telecommunications analyst at the research firm Ovum in London, told the New York Times that "Breaking into the high-end market was always going to be a challenge for Microsoft and Nokia because Windows phones still donEUt offer the same level of applications that are available on Android and AppleEUs iOS. The software is still lagging behind."

We caught up with Jeff Kagan, an independent technology analyst, to get his take on the Nokia news. He told us the quarterly numbers continue to look worrisome.

"Nokia has shown a slow, but steady level of growth for a while with smartphones. They have roughly 4 percent of the market," he said. "Has that given us a false sense of security?"

Of course, Nokia is hardly the only wireless handset maker to struggle. BlackBerry has made more than its fair share of headlines for poor performance. Indeed, Kagan noted, most...

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