Skip to Content

The Numbers in the Microsoft-Nokia Deal Are Telling

Two deals in two days speak volumes about where the value in wireless technology comes from.
September 3, 2013

The price of the deal stood out the most in today’s news that Microsoft is spending 5.4 billion euros ($7.2 billion) to buy Nokia’s devices business, license its patents, and provide financing to the company. Because just a day earlier, Verizon announced it would pay Vodafone $130 billion for the 45 percent of Verizon Wireless that it didn’t already own. In other words, although Nokia touches many more lives (it probably will sell more than 200 million phones this year, while Verizon Wireless has 100 million customers in the U.S.), it’s worth about 1/40th of Verizon Wireless.

It’s a reminder that in the smartphone craze of the past few years, the lion’s share of the revenue has flowed not to app developers or handset makers, but to wireless network operators like Verizon Wireless, whose business is protected by high barriers to entry and who are less subject to the fickleness of consumer tastes. That was captured neatly in the chart below, from our March Business Report on Making Money in Mobile (see “Smartphones Are Eating the World”).

Even Sprint Nextel, which ranks a distant No. 3 among wireless network operators in the U.S., is being sold for three times what Microsoft is paying for the Nokia assets. Of course, as Apple shows, there is a lot of money to be made in making and selling handsets. But in Nokia’s case the battle was much harder, if not impossible, because it didn’t sell phones on the dominant platforms, iOS and Android, which account for 93 percent of the market.

Keep Reading

Most Popular

Rendering of Waterfront Toronto project
Rendering of Waterfront Toronto project

Toronto wants to kill the smart city forever

The city wants to get right what Sidewalk Labs got so wrong.

Muhammad bin Salman funds anti-aging research
Muhammad bin Salman funds anti-aging research

Saudi Arabia plans to spend $1 billion a year discovering treatments to slow aging

The oil kingdom fears that its population is aging at an accelerated rate and hopes to test drugs to reverse the problem. First up might be the diabetes drug metformin.

Yann LeCun
Yann LeCun

Yann LeCun has a bold new vision for the future of AI

One of the godfathers of deep learning pulls together old ideas to sketch out a fresh path for AI, but raises as many questions as he answers.

images created by Google Imagen
images created by Google Imagen

The dark secret behind those cute AI-generated animal images

Google Brain has revealed its own image-making AI, called Imagen. But don't expect to see anything that isn't wholesome.

Stay connected

Illustration by Rose WongIllustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.