Microsoft buys Nokia’s Devices & Services division, gets its hands on licenses of patents and mapping services, Stephen Elop (former Nokia’s CEO and the former person to run the Office division) returns to Microsoft as the Executive Vice President of the Devices & Services, and 32,000 new employees to work under Redmond’s roof. This is a $7.2 billion acquisition that the software giant hopes will expand even further Windows Phone and tablet market.
Although this can be considered the biggest acquisition in the history of the company, we have to remember that Microsoft has paid $8.5 billion to acquire Skype back in 2011. Nonetheless, this is the first strong signal from the company on becoming the “devices” part in the new “devices & services” model.
According to the official press release the purchase goes like this: “Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash. Microsoft will draw upon its overseas cash resources to fund the transaction. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.”
Perhaps one of the interesting things about this purchase is that former Nokia’s CEO, Stephen Elop, is headed to run the devices division at Microsoft, position which was previously offered to Julie Larson-Green not too long ago and now she will be reporting directly to Mr. Elop. The news further feeds the rumor that Stephen Elop may just become the next Microsoft’s Chair Executive Officer after Steve Ballmer steps down in 2014.
Redmond did try to go forward with the deal back in June 2013, but all efforts failed. Today things are different and with both companies coming together, Microsoft can finally look ahead and start delivering on devices promise.
Originally the software giant announced Nokia’s acquisition September 2nd with an Steve Ballmer open letter to employees, where he noted that “this is a bold step into the future” and he also stated that the Lumia 1020 is just one example of many great things they can accomplish together. On September 3rd, 2013, the company also published the official press release explaining the terms of the purchase, together with a PowerPoint that outlines all the key aspects.
Basically this is what $7.2B gets you:
- Nokia’s phone business
- Nokia’s Qualcomm, other key IP licenses
- Licenses of patents for use in all Microsoft products
- Licenses for Nokia HERE mapping services
- Stephen Elop, a number of new execs, and 32,000+ new employees
Even though the acquisition is a done deal, everything will get finalized if not until the first quarter of 2014. While there is no doubt that if the company executes well, it can only mean success. But despite the fact that Microsoft keeps saying that it’s in the plans to work with other companies that make Windows Phones, such as HTC and Samsung, this move could easily push smartphones makers away from the market.
Though, the final question remains, will this move make people buy more Windows Phones and future devices? Only the time will tell. What do you think?