An example of a negotiation was one that took place in 2013 between Microsoft and Nokia that ended in a deal that would see Microsoft buy off its fellow Tech giant Nokia for 7.2 billion dollars. The move was seen as a bold one for Microsoft who wanted to have a share of the smartphone market. Nokia on the other hand had suffered quite a fall and was struggling to remain relevant in its market. According to Lam, product lines were all running Symbian, an operating system that was considered generally by the public and the market as an outdated, old-fashioned system compared to more modern counterparts, such as iOS and Android that had managed to fully incorporate the use of technologies such as touch screens on their mobile devices (Lam, 2014) . The fact that Nokia was experiencing a huge fall in market share pressured the company to move from a partnership agreement to use the Windows operating system on its devices to an agreement that would see Microsoft acquire the whole company. Many factors were at play despite the final successful of the transfer of Nokia’s mobile division to Microsoft, Nokia‘s CEO was regretful of the deal. Nokia’s interests in the deal were to ensure the strengthening of its brand and to gain more profits. Nokia had the option of joining Google’s Android platform. However, Nokia’s ambitions to be a tech giant different from the rest could not allow for this merger to take place. The last resort was for Nokia to remain on its own platform but seeing the slow speed at which its platform was developing made it harder and riskier, their only way out was to merge with Microsoft.
Microsoft had an edge in the market considering the fact that its personal computer software Windows was already the most used Operating System around the world at the time. It felt that it was time to venture into the smartphone market and Nokia was capable of offering technology and man power needed to develop smartphones. Microsoft was going to use its already robust Windows platform to market the Windows phone products. While Microsoft viewed Nokia as a potential partner in the handset business, Nokia viewed Microsoft as a software partner.
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One of the major strategic moves that Nokia made in this negotiation was to lure Microsoft into signing an exclusivity agreement. By tying Microsoft’s hands, Nokia made sure that Microsoft was solely committed to producing software for itself. Nokia knew that Microsoft had at least dabbled with the idea of releasing a Surface smartphone and Nokia needed to keep Microsoft in check (Hickie, 2013) . The strategic move to sell its mobile manufacturing branch to Microsoft was however, one that would raise eyebrows considering the pasts of Nokia’s and Microsoft’s involvement in the smart phone business. Surely, there must have been other options. On the other hand, at first, Microsoft strategic approach to the negotiation table was a little less aggressive. Nokia felt that Microsoft was treating them like an ordinary tech firm they could sign off a deal with. Microsoft soon realized that if Nokia were to manage to sign a deal with Google, then this would effectively mark the end of their smartphone dreams. This was part of the reason they agreed to enter the exclusivity agreement with Nokia. Microsoft was hoping to bring Nokia from its financial quagmire through an intensive advertising campaign, coupled with the assimilation of Windows Phone products with the rest of the PC software, a strategic move that did work after all.
The outcome of the negotiations between Microsoft and Nokia was a win-win where both Nokia and Microsoft made gains in the short term. While Nokia ended up regaining its position with its smartphone brand, Microsoft was able to show that it is capable of rising above other tech giants in the industry. There are several factors however that led to difficulties that brought strain to their agreement making it unsustainable in the long term. The merging of Nokia, a Finnish company with Microsoft had some opposition even from the Finnish government itself eventually leading to a drop in the share market that Nokia held. This led to the acquisition of the whole Nokia mobile device franchise by Microsoft.
In my own personal opinion, the negotiation strategy applied in this case was not comprehensive enough. The deal between Microsoft and Nokia was partly short lived due to the level of mistrust they had for each other. Microsoft on one hand was working on the production of its surface phone while Nokia, on the other hand, was working on developing devices that ran Android, Google’s operating system all the while still under an agreement on exclusivity. At the time the negotiations between Nokia and Microsoft were taking place, Nokia’s Symbian operating system had a more robust foundation as compare to Microsoft’s. Nokia could have taken the time to develop a more robust plan, and this would probably even have led them to attain better negotiation terms with other companies, hence securing their future success.
References
Hickie, B. (2013, September 23). Nokia's Power Play: A Case Study on Strategic Partnership Positioning . Retrieved from OpenView: http://labs.openviewpartners.com/strategic-partnership-positioning-nokia-case-study/#.WN94vfmGPDc
Lam, A. H. (2014, January). The Microsoft Nokia Strategic Alliance. Retrieved from dadablog: https://dadablog.net/publications/The_Microsoft-Nokia_Strategic_Alliance.pdf
