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In the midst of the acquisition of Nokia's (NYSE:NOK) handset business by Microsoft (NASDAQ:MSFT), it might seem odd to be focused on product placement, but the ability of the company to stay mainstream is critical to its success. As such, when my daughters asked me why I did not have a Nokia phone like the one Katy Perry uses in her new video 'Roar,' looking at how various Nokia Lumia devices stack up against competing Google (NASDAQ:GOOG) Android smartphones and Apple's (NASDAQ:AAPL) iPhone provides a solid backdrop against which to consider the deal. Ultimately, as much as people seem to love to hate Microsoft, the move makes sense and has the potential to serve as a great catalyst for getting the company more squarely in the mobile fight.

The Acquisition

The deal between Mr. Softy and the second largest handset maker in the world behind only Samsung (OTC:SSNLF) comes with a $7.2 billion price tag. With Nokia CEO Stephen Elop, a former Microsoft exec, in the mix, you must assume the negotiation was an easy one; it is worth noting that Elop's name has been mentioned as a possible replacement for the departing Steve Ballmer. In connection with the acquisition, TechCrunch reported that Nokia will also drawdown the $2 billion in convertible bonds it was offered by Microsoft on an accelerated schedule.

After the deal, Nokia, which has struggled as the number three smartphone platform with Windows - definitely benefitted by BlackBerry's (NASDAQ:BBRY) continued struggles - will get a much needed cash infusion and be able to focus on its profitable network business. The combined 'NokiSoft' will give Microsoft a much more serious foothold in the mobile device market. Nokia has been the most significant OEM for the company's Windows Phone platform, and brings integrated experience to the table. Microsoft has struggled in the realm of devices, having to take a $900 million charge against unsold Surface tablet inventory.

To put some of the numbers in perspective, last year Nokia shipped 332 million units relative to 130 million for Apple. However, according to IDC, on an operating system basis, Google owns the market with 79.3% of devices running Android, 13.2% for iOS and only 3.7% to Windows Phone; BlackBerry fell to 2.9%. It should also be noted that as the global shift to smartphone continues, Nokia has seen a contraction in sales - the company shipped 422.5 million units in 2011.

iPhones Are Still the Coolest

A recent look at U.S. market share for smartphones shows that, not only does Apple still enjoy the top spot, it actually grew its market share during the most recent quarter. The iOS market share rose from 39.2% to 40.4%, while Samsung also grew from 22% to 24.1%; Nokia OS's combined for about 3.3% of U.S. market share. These figures come in a quarter near the end of Apple's product cycle, so seeing Apple surge to even greater heights after the release of the iPhone 5S and the iPhone 5C would not be unexpected.

The Power of Advertising

The surge in Samsung's sales of smartphones, particularly in the U.S., is largely attributable to its push on the advertising side. The company's ad campaign attacking Apple helped make the Samsung Galaxy line the biggest iPhone contender and the bestselling Android device on the market. Despite the fact that some reviewers preferred other options to the Galaxy S4, Samsung has become known as the iconic Android brand and continued to do very well.

What all of this has to do with Microsoft, Nokia, and, yes even Katy Perry, is that the Windows Phone has finally been getting into the advertising game with ads for the Lumia that blast both competitors. Product placements in mainstream videos, like Ms. Perry's latest smash single, raises awareness and creates organic buzz that is hard to find in any other form. This is not to suggest that millions of consumers will change their smartphone choice as a result of these plugs, but getting the Lumia into the national consciousness is an important first step for Microsoft's new acquisition.

The Stock Itself

MSFT Chart

MSFT data by YCharts

While Microsoft is up over 16% so far this year, shares have shed roughly 11% in the last month. This was largely driven by weak numbers at the company's last release - including the write down mentioned above. There is a fair amount of risk associated with the CEO transition in process, and a deeper push into the device market is seen as a negative by some, but I still like the company and the stock. With a P/E of about 12 and a dividend yield of 2.8%, the stock is fairly priced and offers income to help weather any hiccups. There is definitely a speculative element in play with Microsoft, but as it pushes deeper into mobile, continues advertising, and awaits the release of other successful products (the Xbox One and, I hope, an improved version of Windows with 8.1), the stock deserves an allocation.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Nokia Roars With Katy Perry, Great News For Microsoft