Microsoft Buys Nokia Devices Unit in $7.1 Billion Deal

In a surprise announcement, Microsoft and Nokia have confirmed that both the companies have entered into a deal wherein Microsoft would be buying out Nokia’s entire devices unit. The acquisition will let Microsoft use the Nokia brand and own all of Nokia’s current assets that has anything to do with its hardware business. Microsoft also gets access to thousands of Nokia patents using which they plan to deliver the next generation of Windows Phone powered smartphones. Along with Nokia’s Lumia brand, Microsoft will also now take care of Nokia’s low end business – which involves the all important “Asha” brand of feature phones.

Both companies expect to close the deal by the first quarter of 2014 by when Microsoft will pay 3.79 billion Euros for Nokia’s business. Then there is the 1.65 billion – just for its patent portfolio. The acquisition would also involve the transfer of as many as 32,000 employees of Nokia to the Microsoft fold. There are over 18,300 amongst these who are directly involved in manufacturing.

The deal to acquire Nokia is perhaps the last assignment that outgoing Microsoft CEO Steve Ballmer executed. Interestingly, post the acquisition Nokia’s current CEO Stephen Elop too is slated to step down from the position. With Nokia’s hardware unit becoming a part of Microsoft, the company expects to have more synergy between hardware and software just like Apple currently has with iOS.

As for Nokia, the company has now been relegated to the position of a service provider that would be developing Navigational systems (Here Maps). Nokia will also concentrate on its Nokia-Siemens Network – network infrastructure business as well as Nokia Advanced Technologies – a licensing division which would license Nokia owned technologies to clients.

The sad part about all this is the probability that future smartphones from Nokia would not have the famous, good ol’ Nokia logo. This is because Microsoft has purchased only the Lumia and Asha brands from Nokia for its smartphones. Microsoft will use the “Nokia” name for its feature phones though for the next 10 years.

Historic day indeed!