Microsoft buys Nokia's phone and services division
3rd Sep 2013 | 04:26
Microsoft diving phone-first into the hardware business
Some may argue it was inevitable following the deal inked over two years ago that saw Nokia exclusively offer devices running the Windows Phone operating system, but Microsoft has just announced its intentions to purchase Nokia's devices and services divisions.
The deal - which seemed doomed to fail back in June - also sees Microsoft license all of Nokia's patents as well as licensing and using Nokia's mapping services.
Of course, that kind of acquisition doesn't come cheap. The deal is setting Microsoft back €3.79 billion ($US5 billion, £3.2 billion, AUD$5.6 billion) for the devices and services divisions, and €1.65 billion ($US2.18 billion, £1.4 billion, AUD$2.4 billion) to license Nokia's patents.
The deal is expected to be finalised in the first quarter of 2014, provided Nokia's shareholders and industry regulators approve.
The Steve and Stephen double team
More than 32,000 Nokia employees from all around the world are expected to move to the Microsoft family as part of the acquisition, but according to the men who orchestrated the deal, the real advantage will be the accelerated growth of the company's mobile device offering.
In the joint press release from Nokia and Microsoft, outgoing Redmond boss Steve Ballmer claims that "It's a bold step into the future – a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft's share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services."
Stephen Elop, who has moved from Nokia President and CEO to Nokia Executive Vice President of Devices & Services as part of the deal, echoed Ballmer's thoughts, saying: "Building on our successful partnership, we can now bring together the best of Microsoft's software engineering with the best of Nokia's product engineering, award-winning design, and global sales, marketing and manufacturing."
Elop, along with four other Nokia directors, will transfer to Microsoft as part of the deal as well when it becomes finalised.
Microsoft, the biggest phone brand?
That latter division accounts for hundreds of millions of mobile phones sold every year around the world, with 53.7 million units sold in the second quarter of 2013 alone and also incorporates the Asha brand of phones.
However, there aren't plans to kill off the Nokia phone brand just yet, with Microsoft licensing the Nokia brand for use with current Nokia mobile phone products.
And speaking of licensing, the patent license agreement will last for 10 years from when the deal is finalised, and sees Nokia assigning its current licensing arrangements with Qualcomm to Microsoft.
The Nokia HERE licensing arrangement is a little bit shorter at just four years, although the deal has been reciprocated for Nokia to use Microsoft patents in its HERE mapping services.
- What's the bet this announcement just shortened the odds on Elop taking over the Microsoft top job?