Microsoft Enters Into $7.2B Deal To Buy Nokia’s Devices And Services Business And License Its Patents
By Colleen Taylor From Tech Crunch
In a surprise move, Microsoft announced Monday (2) evening that it has inked a deal with Nokia to acquire “substantially all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.”
The total price of the deal is EUR 5.44 billion in cash, which is currently worth $7.17 billion in U.S. dollars. The Devices and Services business acquisition accounts for EUR 3.79 billion of that, with the patent licensing deal making up the remaining EUR 1.65 billion.
Nokia and Microsoft inked a partnership back in 2011, but this is clearly a much more serious collaboration of the two companies.
Also as part of the deal, Nokia’s CEO Stephen Elop will be stepping aside as Nokia President and CEO to fill a new role at Microsoft as “Nokia Executive Vice President of Devices & Services.” Being that Elop has emerged as a leading rumored contender for the soon-to-be-vacant spot at the helm of Microsoft, this could be a strong signal about the future of Microsoft’s executive leadership.
In a press release announcing the news, Microsoft CEO Steve Ballmer said the following:
“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. 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.”
Although this seems like the end of Nokia as we know it, it sounds like for now the company is still planning on moving forward as a standalone entity of some sort — although with a very different strategy. Risto Siilasmaa, Nokia’s board chairman and current interim CEO following the departure of Elop, was quoted in a press release as saying “this is an important moment of reinvention and from a position of financial strength, we can build our next chapter… the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space.”
This is breaking news with potentially large ramifications — we will update this post with more information, and follow up with more analysis and news.
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Microsoft explains why it’s buying Nokia, says it needs a ‘first-rate’ smartphone experience (updated)
By Mat Smith From Engadget
Microsoft’s outlined its reasoning behind why it’s gone deep into smartphones in a lengthy presentation file. Alongside cheering Windows Phone’s current growth (No.3!), it’s reaffirmed that it’ll bring its products and services to rival mobile OSes, still involving itself with “iPhone and Android/Galaxy phones.” However, it tempers this point, adding that the Redmond company can’t risk “having Google or Apple foreclose app innovation, integration, distribution or economics.” Given the strength of the top two, Microsoft is telling it straight, adding that it needs a “first-rate Microsoft phone experience for users” to compete, suggesting that its portfolio of devices isn’t quite there yet. The slides also outline the purchase of Nokia’s patent collection, one which Microsoft believes is one of the most valuable in the tech sector. MS also thinks that the acquisition will speed up innovation within Windows Phone and protect its future. So, some high hopes for the purchase.
Update: According to slides in the source, Microsoft also has more concrete goals for its Nokia devices acquisition. It’d like to boost its smartphone share to 15 percent by 2018, around four times what it has now, depending on which numbers you believe. Redmond also revealed that it makes less than $10 per handset in its current arrangement with Nokia, and thinks it can make over $40 going forward, while saving $600 million in costs. With all that, Microsoft is projecting $45 billion extra in revenue by 2018, with profits in the $2.3-4.5 billion range. High hopes indeed.
Steve Dent contributed to this report.
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