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CHARGING

These companies have burned tens of billions of dollars trying to chase the iPhone

Satya Nadella and Stephen Elop
AP/Brian Smale
Nadella and Elop had an uphill climb.
This article is more than 2 years old.

Microsoft is the latest to admit its bet on the smartphone business has been a bust.

Today, the company announced it would take a $7.6 billion impairment charge related to its 2013 acquisition of Nokia—a $7.9 billion deal when it closed—plus a roughly $800 million restructuring charge. (Nokia was worth $115 billion when Apple’s iPhone launched in 2007.)

But it’s hardly the only company that has lost money or market value—many to the tune of billions—trying to chase the iPhone, which turned the wireless industry upside down with revolutionary hardware and software.

  • HP acquired Palm in 2010 for $1.2 billion. (Palm’s market cap had peaked a decade before at $54 billion.) In 2011, HP shut the Palm business down, taking a total of $1.7 billion in charges, including a $885 million write-down.
  • BlackBerry has lost 95% of its market cap. In June 2007, when the iPhone debuted, BlackBerry was valued at $37 billion. A year later, it was briefly around $80 billion. Today, it’s worth $4 billion and trying to shift to a software-based business.
  • HTC has, too. The Taiwan-based handset maker is now worth about $2 billion, down from almost $37 billion in mid-2011.
  • Sony wrote down about $1.7 billion of its Sony Mobile business—formerly the Sony Ericsson joint venture—last year. It’s focused on the Japan market now.
  • Google acquired Motorola Mobility for $12.5 billion in 2011. Three years later, it sold Motorola’s handset business to Lenovo for $2.9 billion. (This isn’t actually as bad as it sounds. Motorola came with $3 billion in cash. Google had also sold Motorola’s set-top box business to Arris for $2.4 billion. It wound up spending about $4 billion for Motorola’s patent portfolio, which it still owns most of. And funding some of Motorola’s operating losses. Still, not a money-maker.)

Why bother? Because the smartphone business, when you’re on the winning side, can be a great one.

Apple has generated more than $450 billion in iPhone revenue so far, and its market value has soared from about $100 billion when the iPhone launched to around $730 billion now. Samsung Electronics’ market cap has nearly doubled over that span, too. And Chinese upstart Xiaomi—which many see as a serious contender in the Android market—raised financing at a $45 billion valuation last year.

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