Microsoft Is Buying Nokia's Phone Business

The $7 billion deal signifies Microsoft's commitment to not just software, but phones, as well.

Microsoft is sweeping up parts of the Nokia empire, it announced this morning. The software firm is to pay 3.79 billion euros ($4.99 billion) for the Finnish firm's devices and services business, and is spending a further 1.65 billion euros ($2.17 billion) to license Nokia's patents and maps.

Calling it "a bold step into the future," Steve Ballmer said the acquisition was "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."

There is a bit of a change at the top of Nokia, with Risto Siilasmaa, the firm's chairman, now becoming interim CEO. Chief executive and president Stephen Elop is now Nokia executive vice president of Devices And Services. Does this mean Elop, a former Microsoft executive, is in contention for the CEO's job at Redmond? Ballmer thinks so. Alongside Elop, Nokia will lose four of its bosses: smartphone chief Jo Harlow, president of operations Juha Putkiranta, executive vice president of mobile phones Timo Toikkanen, and executive VP of global sales and marketing Chris Weber to Microsoft.

There has been an alliance between the two firms for two years now, since Ballmer and Elop wrote a joint open letter to announce a partnership aimed at boosting Nokia's OS. Although it was suggested last month that Microsoft was contemplating tying up a deal with BlackBerry, Nokia looks to be a much better fit, given its solid foundations in hardware and its popular Lumia smartphone model.

But who is the big beneficiary of this current deal? Fast Company's Kit Eaton last year suggested it was Microsoft holding Nokia back. Windows Phone, however, is looking good in five of the biggest European markets, plus Mexico, with its smartphone market share beating BlackBerry's. It is, apparently, the first smartphone of choice for those leaving the compact and bijou world of the feature phone. This is probably because of the sheer reach of Nokia in the second age of the mobile phone--post house brick, but pre-smartphone.

Who do you think is this deal's big winner? Use our comments box for your pearls of wisdom, please.

[Image: Flickr user twicepix]

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1 Comments

  • renan jegouzo

    I doubt it will be a success. Microsoft has too strong leadership problems, with lots of (good) leaders that quit during the last months, to be enough powerful for transforming this purchase in a winning fusion.