BREAKING: MSFT buys Nokia's Devices and Services Unit

in General Discussion edited January 2014

Source: The Verge



Microsoft has purchased Nokia's Devices and Services unit, it announced today. It unites Windows Phone 8 with its biggest hardware supporter, and gives the company an integrated solution across hardware and software. When the deal closes in the first quarter of 2014, Microsoft will pay 3.79 billion Euros for Nokia's business, plus another 1.65 billion Euros for its portfolio of patents. The 5.44 billion Euro total is considerably less than Microsoftpaid for Skype in 2011. 2,000 people are expected to transfer from Nokia to Microsoft, including 18,300 that are "directly involved in manufacturing."

A driving force behind the sale seems to be Nokia's low-end Asha brand, which Microsoft has acquired outright — it will continue to license the Nokia brand. But Asha gives Microsoft a far larger footprint for Windows Phone, and access to millions of customers in developing countries that it plans to use as an "on-ramp to Windows Phone."

The purchase comes on the heels of what appeared to be a failed acquisition in June, though at that point it seemed as if conversations had broken off entirely. Now the two come together, in what outgoing Microsoft CEO Steve Ballmer called "a bold step into the future." In an email, Ballmer cited the Lumia 1020 as an example of what the companies could do together, but said the phone hadn't caused the marketshare bump it deserved. "Now is the time to build on this momentum and accelerate our share and profits in phones," he wrote.

Its device business now gone, Nokia's plan is to focus, on three core technologies: NSN (its network infrastructure) HERE (its maps and location-based services); and Advanced Technologies (a licensing and development arms. Microsoft will pay Nokia for a four-year license of the HERE services, bringing the newly smaller company more revenue and stability than it had previously. But it also makes Nokia a much smaller company.

As part of the agreement, Nokia CEO Stephen Elop is stepping aside; he's now leading Microsoft's Devices team. That puts him in an odd position with Julie Larson-Green, who Ballmer said will be joining his team, but will also be responsible for other hardware like Surface and the Xbox One. The exact scope of Elop's role isn't exactly clear, and with a soon-to-be-vacant CEO seat we expect plenty of rumors to fly as the acquisition closes. Risto Siilasmaa was named Nokia's Interim CEO — he was previously chairman of the company's Board of Directors.


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