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Microsoft acquires Nokia's mobile business for $7.2 billion
Microsoft acquires Nokia's mobile business for $7.2 billion
September 3, 2013 | By Mike Rose

September 3, 2013 | By Mike Rose
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    8 comments
More: Smartphone/Tablet, Business/Marketing



As Microsoft looks to bolster its mobile offerings, the company today announced that it has purchased substantially all of Nokia's Devices and Services business for around $7.2 billion.

Microsoft and Nokia have been in a partnership together since February 2011, and Nokia's Lumia smartphone series, which comes with Microsoft's Windows Phone OS as standard, has seen increasing success in the last year or so.

With this acquisition, Microsoft will be hoping to greatly improve the revenue that it brings in through its mobile business. The transaction is expected to be finalized during the first quarter of 2014.

The deal means that Nokia will now assign its existing mobile licenses and patent agreements to Microsoft. Its existing license with Qualcomm, for example, will now benefit Microsoft, while its rights under agreements with IBM, Motorola Mobility and Motorola Solutions will also fall under Microsoft's wing.

Microsoft also believes that the acquisition will help the company to properly compete with both Google and Apple, since it will now be able to drive down costs on Windows Phone devices by utilizing Nokia's existing IP licenses.

Microsoft will be able to use the Nokia branding on any mobile devices released that are based on the Series 30 and Series 40 operating systems as part of a 10 year licensing arrangement between the two companies -- Nokia will continue to own and maintain the Nokia brand throughout this period.

Approximately 32,000 Nokia staffers are expected to transfer to Microsoft as part of the move, meaning that around 24,000 people will remain at Nokia. The company now plans to focus on network infrastructure services, and mapping and location services.

And current Nokia president and CEO Stephen Elop has stepped down, citing the need to "avoid the perception of any potential conflict of interest between now and the pending closure of the transaction." He will now fall into the role of EVP of Devices & Services, and join Microsoft once the deal is finalized.

Risto Siilasmaa, chairman of Nokia's board of directors, will take up the role as interim CEO while Nokia looks for a permanent replacement for Elop.


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Comments


Leszek Szczepanski
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So let me get this straight:

This guy, Stephen Elop comes to Nokia, from Microsoft, kills it and then sells it back to it's previous/future employer for a fraction of a price.

There's obviously something not right here...

Marc Schaerer
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Potentially, though I am unsure that this is bad.
Given statements from Nokia in the past about how WP8 is hindering them to use their full potential, a closer tie in as well as Microsofts new management structure should definitely help the nokia device group to accelerate significantly. If we are lucky they will also get to work on the OS code itself which would be a major plus for WP8 as Nokia clearly has more talented people in those ranks than Microsoft.

But there is little doubt that he did at least some things right (symbian had no future, but its sad that nokia killed Meego and what could have become SailfishOS) given WP8s second rank in mobile sales in South America ahead of Apple, RIM and others only beaten by Android.

Maurício Gomes
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Here in Brazil WP8 is nowhere near Android and Apple... Mostly because it is too expensive.

Nokia had a significant foothold here with Symbian, and killing it to favour WPx was a great mistake in my opinion.

Ravikant Gumma
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Same here in India, nokia had 90% of market share for more than 10 years,
and when the smartphone wave came by, everyone except nokia was ready for that.

Now even small companies like micromax, spice, xolo, etc. have higher market share than nokia.

R.I.P. Nokia.

DanielThomas MacInnes
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I'm pretty sure I've seen that happen on Goodfellas or The Sopranos. Nice work if you can get it.

nick ATpainttehDOTcom
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poor Nokia

Logan Foster
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I think it was only inevitable that this would happen. The two companies needed one another and in the end this will probably benefit them more than their previous partnership was if either party ever wanted to go toe-to-toe with Samsung (who is the real 800lbs gorilla in the room).

I do agree that it looks fishy with Elop at the helm of this, but lets remember that the CEOs responsibility is to the shareholders. Nokia sorely missed the smartphone boat (almost as badly as Motorolla did) and as a result lost a lot of its value even before their partnership with Microsoft. As such they did what they could do recover and create enough value for this deal to even happen.

Bob Charone
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Actually its $5B, the other $2B is for rights to Nokia patents for 10 years


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