Microsoft's Vertical Acquisition Of Nokia

The acquisition of a cell phone manufacturer by a software company would not have been seen as a vertical acquisition 10 years ago, but Microsoft's recently announced acquisition of Nokia is exactly that. For the past several years, Nokia has been the only major cell phone manufacturer to use the Windows Mobile OS. Given Nokia's recent problems, it is possible that the company would be going out of business soon, or just as bad for Microsoft, changing to the Android OS. In fact, the deal calls for €1.5 billion in immediate financing, a unique clause for an acquisition, a possible indication of financial problems at Nokia. Either way, Microsoft now has a captive cell phone manufacturer for its OS.