Microsoft
Microsoft-Nokia Mobile Division Acquisition
Estimated impact: $7.6B write-down; 7,800 layoffs
Microsoft acquired Nokia's devices and services division for $7.2B to bolster Windows Phone. The acquisition failed to reverse Windows Phone's market share decline, and Microsoft wrote down $7.6B and laid off 7,800 employees within 18 months.
Decision context
Whether to acquire Nokia's mobile hardware business to create a vertically integrated mobile ecosystem, despite Windows Phone's persistent sub-5% market share.
Biases present in the decision
Toxic combinations
- Sunk Ship
- Optimism Trap
Reference class base rates
Across all 146 curated case studies in our library:
Lessons learned
- Sunk cost fallacy: years of Windows Phone investment made abandoning the platform feel unacceptable, leading to doubling down via acquisition
- Network effects in mobile ecosystems mean that hardware alone cannot overcome an app gap
- Hindsight bias: the acquisition was widely questioned at the time, but CEO Ballmer anchored to the strategic vision
Source: Microsoft SEC filing 10-K (2015); Ben Thompson, "The Nokia Acquisition" (Stratechery, 2013) (SEC Filing)
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