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Microsoft buys Nokia Devices & Services business

Today, the Internets blew up with news about Microsoft buying Nokia’s devices and services business:

…a transaction whereby Microsoft will purchase substantially all of Nokia’s Devices & Services business

I’m not sure that anyone knows what “substantially all” means, is that everything or just mostly everything? I also find it interesting that less than two weeks ago Ballmer announced his retirement. The timing seems oddly orchestrated. Nokia and Microsoft might seem like a logical union to take on the likes of Apple and Google who already have hardware divisions.

The big questions will be:

1. What will current Windows Phone OEMs make of this move? It’s a good bet that Surface OEMs weren’t happy when Microsoft went forward on making its own hardware. Microsoft clearly has to choose hardware or OEM licensing.

2. Will this big shift cause Ballmer to fade into the background? It’s a good bet that he won’t work out his remaining year, but what about the month.

3. Microsoft is good at software. Nokia is good at hardware. Does anyone really think that the two together can take on Apple?

My sense is that the new MicroKia needs to build a highly profitable smartphone that can undercut Apple’s lower cost iPhone 5C by at least $100 and do everything that phone can do. That’s a tall order.