Rumors of Microsoft making a bid for Nokia’s handset business have once again resurfaced, but this time, it’s highly unlikely that anything will come of it.

According to a report from the Wall Street Journal, sources stated that Nokia and Microsoft had originally made significant progress on an acquisition deal, but now the deal is apparently off the table.  It wasn’t clear whether there was a dispute over the acquisition price, but the WSJ states that it’s unlikely that the deal will be revived again any time soon.

A Nokia representative refused to comment on whether Microsoft was really eyeing the company for an acquisition, but did say that it’s normal for the two companies to meet on a regular basis since they have a deep partnership.

The Deal is Dead

It’s not the first time Nokia has been rumoured to be up for grabs.  Last year, Microsoft and Samsung were both said to be eyeing the Finnish company for an acquisition, but the South Korean giant straight up denied it.

One reason this story keeps surfacing is that Nokia just seems to be such a perfect fit for Microsoft.  It’s no secret that Redmond is looking for ways to become more competitive in mobile, but we have to ask, why would it buy something when it’s already benefiting from it?

Nokia has pledged its allegiance to Microsoft by making Windows Phone its sole mobile OS. In doing this, they’re paying licensing fees to Microsoft to use the platform on its smartphones – now don’t forget that Google offers Android for free, so that’s a huge sign of commitment on Nokia’s part right there.  What this means is that whether or not Nokia actually manages to  sell its Windows Phone-based devices, Microsoft is getting money from it.

To be honest, if there’s anyone Microsoft should be pursuing, it would be Chinese manufacturers:

“Longer-term it is the Chinese vendors that are best placed to challenge Samsung’s market dominance. Microsoft already has a relationship with Huawei and ZTE in the phone space, and Lenovo is a major partner in the PC space. These partners will be needed to help deliver the scale that Microsoft needs,” Jessica Kwee, Canalys Analyst, said.

The Canalys report also stated that by 2017 Windows Phone will have a 12.7 percent market share, just a few bites away from the iPhone’s 14.1 percent.

Nokia’s Not Doomed

Though media reports have been harsh on Nokia lately, stating that the company is in a slump, it actually remains one of the biggest phone vendors in the world as it’s still selling feature phones like hot cakes in emerging markets.  And with Windows Phone being the go-to device for first time smartphone buyers, with 52 percent shifting from a feature phone to Window Phone, Nokia is on the receiving end of this success as the company owns 79 percent of all Windows Phone devices.

Nokia can therefore be confident that when these feature phone buyers finally decide to get themselves a smartphone, there’s a great chance that they’ll opt for a brand they trust, a brand that they’re used to, and that’s going to be Nokia.

Also, if Microsoft does find a new partner willing to focus solely on making Windows Phone handsets, unlike Samsung and HTC who still favor Android, Nokia could always shift its strategy and embrace Android.  With that, Nokia would then be able to sell even cheaper smartphones since it wouldn’t have to pay licensing fees any more, thus its phones would be even more enticing to first time smartphone buyers.