Part of Nokia to be sold for $7 billion to Microsoft

microsoft-buying-nokias-phone-business-for-19-billion-tweetMicrosoft is strategically placing itself to becoming a key player in phone manufacturing by acquiring Nokia’s mobile division. The transaction is geared to take place in the first quarter of 2014. What stands between the software giant and its vision of fully venturing into core hardware manufacture is the approval of Nokia’s shareholders for the acquisition in which Microsoft is to pay Nokia 7.2 billion dollars; 5 billion for devices and 2.2 billion dollars for patents and services.

This deal however means Nokia, the former king of mobile telephony, is in the brink of getting into a forgotten past even though both Steve Ballmer and Nokia’s board chairman Risto Siilasmaa told the press that the deal is at the best interest of both parties. “It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies,” said Microsoft’s outgoing chief executive, Steve Ballmer.

The buy-off places Nokia’s device manufacturing, sales, marketing, and support to be part of Microsoft. This includes 32,000 staff. Divisions not part of the deal include Nokia Solutions and Networks that builds telecommunications equipment, the mapping division HERE (Navteq) and Advanced Technologies group that develops and licenses intellectual property. The deal also includes Stephen Elop, who was formerly of Microsoft before he moved to become Nokia’s CEO, taking over as Chief Executive in charge of devices division in Microsoft.

The transactions will see Lumia smartphone and Asha feature phone become Microsoft brands. In the future these brands could be released with Microsoft brand instead of Nokia.  Nokia’s low-end Asha brand is likely the major reason for the deal having been acquired outright. Asha gives Microsoft access to millions of customers in developing countries that it could use as a strategy for marketing the Windows OS ecosystem.

This agreement comes at a time when Steve Ballmer has announced his retirement and debates concerning his replacement are rife. Already some analysts are thinking that Stephen Elop might take over as the new Microsoft CEO. Nokia is also to have a new CEO in the board chairman, Risto Siilasmaa pending Elop’s exit.

Microsoft has been criticized of “spoiling” ventures that they buy (poor skype performance was been attributed to Microsoft’s acquisition of the platform), but let’s hope the deal will actually be great for the lovely Nokia. I already miss my first phone.


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