Sept. 3 - Former market leader Nokia is to sell its handset business to Microsoft in a last-ditch attempt to gain ground on its rivals in the lucrative smartphone market. Microsoft has set its sights on a 15 percent share by 2018, but as Ivor Bennett reports, it has its work cut out.
It's been two years since Nokia staked its future on the Windows smartphone. It's now finally given up the fight. The company's announced it'll sell its handset business to Windows maker Microsoft for 5.4 billion euros. For Microsoft, it's an attempt to compete in a market it's struggled in until now. CEO Steve Ballmer. SOUNDBITE (English) MICROSOFT CEO STEVE BALLMER SAYING: "Today's announcement is a bold step into the future. For Microsoft it's also a signature event, a signature event, in our transformation. We think this is win win for employees, win win for share holders for customers of both companies." Ballmer is due to step down within the year. Nokia CEO Stephen Elop is favourite to succeed him. (SOUNDBITE)(English) NOKIA CEO STEPHEN ELOP SAYING: "It's very clear to me that rationally this is the right next step to going forward. My feelings today are a mix of feelings as it relates to the possibility of pushing forward more aggressively and winning in this battle we have but at the same time having a great deal of sadness about the changes we're trying to introduce." Nokia's shares jumped 45 percent on the announcement. But the former market leader still has a lot of catching up to do. The stock is down 95 percent from its 2000 peak. And many analysts think the deal is too little too late. Daniel Gleeson from IHS. SOUNDBITE (English) DANIEL GLEESON, SENIOR MOBILE ANALYST, IHS, SAYING: "I don't think it is enough really. You've got two titans of the past really clashing together. It does provide Microsoft with the ability to merge the handset and the software side of its mobile business together, which gives it a better chance of breaking through. However I think Microsoft are probably being over ambitious." The ambitious target is a 15 percent share of the smartphone market by 2018. But with Nokia holding just 3 percent now, it has a long way to go. The Lumia 1020 is the company's latest model. A 41 megapixel camera helped the phone receive rave reviews from the industry. But in a sector where image is everything, the phone's struggled to make an impression. SOUNDBITE (English) REUTERS REPORTER IVOR BENNETT, SAYING: "The displays in this phone shop tell you just how popular Nokia is right now compared to its rivals. Samsung has a big display over there, the iPhone too. Even Sony. As for Nokia, it has just three handsets on display in the whole shop." Not getting into the smartphone market sooner was Nokia's downfall. It's now lagging behind the smaller Chinese firms as well as the big hitters The Microsoft deal still needs the green light from shareholders and regulators. It's expected to go through early next year.