Breaking: Microsoft buys Nokia's mobile business $7.17 billion

By Gadjo Cardenas Sevilla

Microsoft just purchased Nokia's device business for $7.17 billion, effectively making Microsoft a true "devices and services company." The deal was announced late Monday night and is broken down as follows. Microsoft is buying "Nokia’s cell phone unit for 3.79 billion Euros ($5.0 billion) and spending another 1.65 billion Euros ($2.18 billion) to license Nokia’s patent portfolio for a total of 5.44 billion euros ($7.17 billion)," as per a report on AllThingsD.

The deal will also allow Microsoft to absorb various Nokia employees including CEO Stephen Elop, a former Microsoft VP, who will now step down and  become VP of Devices and Services. Nokia Chairman Risto Siilasmaa will serve as interim CEO.

If everything works out as planned,  32,000 employees will be absorbed by Microsoft including 4,700 in Finland. Sadly, a takeover of this magnitude will inevitably sacrifice thousands of jobs and it is expected that 56,000 Nokia employees will not expected to transfer to Microsoft.

“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,” Microsoft's outgoing CEO  Steve Ballmer said in a statement. Ballmer announced last week that he was stepping down as Microsoft's chief executive in the coming year.

While not completely unexpected, Microsoft buying Nokia changes the balance of power in the mobile industry. It ends Nokia's long reign as a pioneering force in devices and will likely end that company's Symbian line of feature phones, which are still popular in various countries because they are affordable. Nokia will continue to focus on making cellular equiptment and developing its location based Here services.

Microsoft's Windows Phone OS is a distant third to Google's Android and Apple's iOS. Windows Phone blew past BlackBerry earlier this year but it still has a lot of ground to cover in order to battle the two leading platforms. Buying Nokia at this particular point in time shows Microsoft's resolve in being a serious contender in mobile devices and services.

Microsoft effectively becomes a smartphone manufacturer, and it remains to be seen whether purchasing Nokia will have any effect in its relationships with other Windows Phone partners such as HTC and Samsung. More importantly, Microsoft will need to work double-time to earn market share in consumer smartphones as well as enterprise from Apple and Google who are leading the pack.

Nokia's absorption into Microsoft was on many analysts' minds when Stephen Elop took over the reins of the beleaguered Finnish giant. Elop's "Burning Platform" memo became the rallying cry for the company to rise up and meet smartphone competitors head on. When Windows Phone was chosen over Android as the new platform direction for Nokia, many believed, rightfully, that a long courtship between Microsoft and Nokia would eventually lead to an acquisition.

While Microsoft will likely continue to use the "Asha" and "Lumia" names for upcoming products because these trademarks will be transferred to them and can be used under the 10-year license agreement, this acquisition is essentially the end of Nokia as a standalone mobile company. Which is bittersweet for those who have been covering the company for the past 15 years.

Nokia really popularized cellular phones for consumers, they spearheaded text messaging and picture messaging, placed cameras on phone and pushed the boundaries of design in various interesting ways.

Nokia's Symbian platform was one of the first to integrate apps and PC-like functionality in a smartphone and they can be credited for many of the features and conveniences that have become standard features in smartphones today. 

What will Nokia become under Microsoft? Will it be chewed up and eventually obliterated the way Palm was when it was bought by HP or will it be the 'house brand' for mid-range Windows Phones like Motorola is now under Google?

My hope is that Nokia retains its flagship status for Windows Phone and that Microsoft will create a more unified ecosystem to keep it competitive moving forward. 

Source: AllThingsD

Update on Tuesday, September 3, 2013 at 8:26AM by Gadjo Cardenas Sevilla

Microsoft's Steve Ballmer just confirmed that Stephen Elop is a candidate for Microsoft's CEO position and that post-acquisition has been shifted from, "external candidate to internal candidate."