Microsoft Spent Billions on a Sinking Ship

Microsoft is selling its feature phone business to Foxconn subsidiary FIH Mobile and HMD Global, the company announced today. The deal worth $350 million is another nail in the coffin of Microsoft’s ailing mobile phone hardware business. It is also further proof that the company’s $7.9 billion acquisition of Nokia’s Devices and Services division in 2014 was nothing short of a disaster.

As the chart below illustrates, Nokia’s once hugely successful phone business had already been in decline for years when Microsoft acquired it, and things have continued to go south ever since. In the first quarter of 2016, Microsoft sold 2.3 million Lumia devices and 15.7 million feature phones, down more than 60 percent from what Nokia sold in Q1 2014, when the acquisition was about to be completed.

Today’s events also mark Nokia’s return to the mobile phone business, as the Finnish company announced a strategic partnership with HMD Global which enables the latter to create “a new generation of Nokia-branded mobile phones and tablets”.