Nokia today announced that Microsoft will be acquiring substantially all of Nokia’s devices and services business for $5 billion. Microsoft will also license Nokia’s patents and mapping assets for another $2.17 billion making the complete deal worth $7.17 billion in cash.
“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,” said Steve Ballmer, Microsoft chief executive officer. “In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.”
“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,” said Stephen Elop, who following today’s announcement is stepping aside as Nokia President and CEO to become Nokia Executive Vice President of Devices & Services. “With this combination of talented people, we have the opportunity to accelerate the current momentum and cutting-edge innovation of both our smart devices and mobile phone products.”
The deal, which is expected to close in the first quarter of 2014, will be a step further into Microsoft’s new direction of becoming a devices and services company. The transition comes at an interesting time with Ballmer retiring within the next 12 months and the search for a new CEO is currently underway. Coincidentally, Elop, who will join Microsoft after the deal is closed along with Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber, is being billed as one of the potential successors to Ballmer.
Apart from the smartphone business, Microsoft will also acquire Nokia’s mobile phone business, which includes the Asha series as well its low-cost feature phones. While nothing is being said at the moment, we expect Microsoft will shut down or spin off this part of business, which ironically also provides the maximum sales and revenues for Nokia’s phone business.
