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Microsoft Makes Mobile Push by Acquiring Nokia’s Devices and Services Business

Microsoft and Nokia

In a transaction estimated to be worth EUR 5.44 billion, Microsoft announced today that it will purchase all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s proprietary mapping services. The arrangement also includes Nokia’s design team and manufacturing and assembly facilities. The deal is expected to close in the first quarter of 2014, pending approval by Nokia’s shareholders, other regulatory approvals, and closing conditions.

Through this acquisition Microsoft is looking to build on its partnership with Nokia, which started in February 2011. Hopefully, this move will advance Microsoft’s place in the mobile marketplace by improving on the success of Nokia’s Lumia smartphones.

The Deal

Microsoft published a summary of the strategic rationale for this new Nokia agreement. Here is a timeline displaying the key events that lead to the strategic partnership:

Microsoft and Nokia partnership

Microsoft CEO Steve Ballmer is excited by the positive prospects of Microsoft phones upon the closing of this deal. Ballmer said about the new deal,

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.

We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution. With ongoing share growth and the synergies across marketing, branding and advertising, we expect this acquisition to be accretive to our adjusted earnings per share starting in fiscal year 2015, and we see significant long-term revenue and profit opportunities for our shareholders.”

Accelerating growth

Speculation has also surfaced that Nokia’s outgoing CEO, Stephen Elop, who previously led Microsoft’s Office division, could become Microsoft’s next CEO!

Could this deal allow Microsoft’s mobile devices to start competing at larger scale with Android and iOS?

   
 
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