Microsoft-Nokia Device Merger Raises Branding Questions

By Craig Galbraith Comments
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**Editor's Note: Click here for our ranking of March's hottest selling smartphones to see how Nokia's Lumia smartphones fared against the competition.**

When Microsoft closes its $7.2 billion purchase of Nokia's devices unit on Friday, the name Nokia – at least its association with mobile handsets – will be a relic of the past.

Microsoft said earlier this week that it will give the name "Microsoft Mobile" to its newly acquired division.

“We look forward to introducing the next billion customers to Microsoft services via Nokia mobile phones," said Brad Smith, Microsoft's executive CP of legal and corporate affairs.

"It was inevitable that the division itself would be renamed using one of Microsoft’s typically inward-looking titles," noted Wally Swain, senior VP of research at Yankee Group, commenting specifically on a Telegraph article. "That, frankly, is irrelevant. What matters is how the devices will be branded in the marketplace, and it appears that whatever brand recognition ‘Nokia’ has today, Microsoft will have very limited time to take advantage of it."

Microsoft is only buying an exclusive license to the Nokia brand for devices until the middle of next year, Swain pointed out. The remaining part of Nokia not being sold to Microsoft has said it won't compete with the Redmond, Wash.-based software giant until then.

"The ‘up to one year’ that Microsoft will manage the nokia.com domain is probably a good indicator of when both parties expect the Nokia brand to revert to the Finnish company," Swain added. "It’s clear that eventually Microsoft was going to have to move to different branding or face the potential threat of other ‘Nokia’ devices in the marketplace. And ‘eventually’ is probably a lot sooner than one would have expected when a company buys an operating division with a strong brand from a company that remains active in a related space."

Nokia introduced its Lumia line of smartphones – which run on Microsoft's mobile operating system – in late 2011, hoping to catapult the once-great Finland-based manufacturer back into an elite class of handset vendors. Sales have been decent at times, but not nearly enough to help Nokia compete with Apple and Samsung, which own the majority of market share.

Microsoft announced last September that it planned to buy the Nokia unit.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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