Microsoft buys Nokia's Devices and Services unit for 5.4 billion Euros

By on September 2, 2013, 10:51 PM
microsoft, nokia, windows phone, mapping, lumia, buyout, wp8, stephen elop, services, devices

Huge news is coming from Redmond today, with Microsoft announcing that they've purchased Nokia's Devices and Services unit for 5.4 billion Euros. Of that sum, 3.79 billion Euros (~US$4.99 billion) will be spent on the business, while a further 1.65 billion Euros (~US$2.18 billion) will snag the company's patent portfolio.

The acquisition of the Devices and Services unit brings across the entire mobile phone business, including their Lumia (Windows Phone) and Asha (feature-phone) ranges, as well as assembly facilities, design teams and sales personnel.

Around 32,000 employees will transfer from Nokia to Microsoft thanks to the purchase, including 4,700 people in Finland, and 18,300 people directly involved with manufacturing. Nokia CEO Stephen Elop has stepped down from his position, and will return to Microsoft once the deal completes in Q1 2014. Risto Siilasmaa will assume an interim CEO position at what remains of Nokia.

Without the devices unit, Nokia will focus on delivering three core technologies: their HERE location-based services (which Microsoft has licensed for four years), Advanced Technologies (a licensing and development arm), and network infrastructure (NSN). However, with the Lumia business now belonging to Microsoft, Nokia will become a much smaller company.

In an email by Steve Ballmer to Microsoft employees, the exiting CEO stated that Microsoft is "very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together". He highlights the "incredible work" the team has achieved, producing devices such as the 41-megapixel Lumia 1020, stating that "now is the time to build on this momentum and accelerate our share and profits in phones."

Microsoft's acquisition of Nokia's Devices and Services unit for 5.4 billion Euros is considerably less than the $8.5 billion the company paid for Skype in 2011. This deal, however, could be pivotal in setting up the future of Windows Phone, with a close marriage of hardware and software potentially setting up the company do to serious battle with iOS and Android.




User Comments: 33

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St1ckM4n St1ckM4n said:

Welp, I guess the possibility of Nokia ditching WinPho for a couple Android handsets just went flying out the window.

2 people like this | Archean Archean, TechSpot Paladin, said:

Probably a much better deal than Google's Motorola acquisition, with much broader market outreach world wide. Good luck to them, and hopefully when it come time to finally ditch my aging S3 in few months, they will have something new/exciting to replace it.

Oh and Nokia speed up your damn GDR2 release for 920!

Guest said:

Well then, there will be no more Windows Phones for other companies: Samsung, LG, Motorola, Alcatel, Acer...

Archean Archean, TechSpot Paladin, said:

@Guest

Hardly any one of them doing a commendable job when it comes to rolling out WP phones. For example, Samsung is simply recycling their old left over parts for ATIV line, which is pretty pathetic offering (at least that is my feeling from trying it). And HTC, at least tried (but half heartedly) with 8 line, but again, nothing exciting or innovative except looks.

Skidmarksdeluxe Skidmarksdeluxe said:

I guess that's the end of Nokia as a company. Pity. When cellphones were cellphones, Nokia was always my favourite. I owned a good few.

BTW I wonder what Ballmer was busy thinking with that big grin plastered all over his face... probably not of the acquisition but rather the 1 bil. handshake he's gonna receive.

1 person liked this | Arris Arris said:

Ballmer trying to go out on a high?

1 person liked this | misor misor said:

MS + N = MSN...this is one union I approve of.

with Samsung becoming the de facto leader in the android ecosystem (and possible breakaway from it), the marriage of Google + Motorola, and the presence of Apple's iOS, I hope there will be a foursome competition which will bring great devices, satisfactory services, and lower product prices.

...and Elop transferring back to MS is just an icing...he will become the CEO once Ballmer relinquishes control 'within 1 year'.

1 person liked this | Puiu Puiu said:

Probably a much better deal than Google's Motorola acquisition, with much broader market outreach world wide. Good luck to them, and hopefully when it come time to finally ditch my aging S3 in few months, they will have something new/exciting to replace it.

Oh and Nokia speed up your damn GDR2 release for 920!

I think google's Motorola acquisition payed for itself day 1 ^_^ The patents they got were very important to them.

Archean Archean, TechSpot Paladin, said:

Did it? I am still in doubt. For example, MS earns almost a billion $ from android makers in lieu of patent fee. Secondly, Motorola is a minor player outside US and some European markets.

On the contrary, Nokia is the major player in two key areas, I.e. for MS it is WP market share, and in addition to that feature phone business. Nokia in fact has been successful in blurring lines between feature and smartphones with their budget Asha line up, which is still doing very good business in Asian markets.

Guest said:

Archean, I don't know how it is where you live (or where you live to begin with), but here in Brazil Motorola has a very significant presence. In a country where high-end smartphones sales are minority, the mid-to-low-end RAZR series is one of the main line of Android products here, right on par with the more modest Galaxies (S3/S4 Mini and below) and the LG L3/L5/L7 lines. Also, Motorola has assemblies here, so the Moto X customization will be fully available, and I have seen many people excited about it among my social circle, myself included (not a good representative of the whole country, but enough to assume it may have decent demand).

It's probably the same on the rest of South America, and at least on some Asian markets. On those cases, I'd say the acquisition by Google paid off well.

Prince_ice Prince_ice said:

Not exactly. Google still rolls out android for other devices even after its acquisition of Motorola. I don't see why it shouldn't be the same here.

Well then, there will be no more Windows Phones for other companies: Samsung, LG, Motorola, Alcatel, Acer...

hitech0101 said:

I don't like the smile on both the faces.

Guest said:

What do you know, Stephen Elop could really become Microsoft CEO very soon.

Guest said:

Nokia... you are such a disappointment! Loser Nokia, once a giant now becomes a cockroach being crushed by the Apples, Samsungs and all other platforms.

JC713 JC713 said:

Eh, I hope MS doesnt screw it up.

VitalyT VitalyT said:

Interesting deal, quite exciting. Although Nokia still has good presence in the mobile market, they have nothing else, and Microsoft has had ambitions reaching way outside, into laptops and play stations too.

For Microsoft to fulfil their long-term ambitions they would need to consume someone like Sony, who has fingers in every pie that MS has been eyeing for years, but it is probably one too big for them.

Staff
Per Hansson Per Hansson, TS Server Guru, said:

This is probably the best decision MS have done in a long long while, should have come much earlier tho.

NuguPabo NuguPabo said:

Very exciting indeed! A nice gift to the new CEO whom I don't believe will be Mr. Elop even though he's coming back to MS. They really need to take this opportunity to get in the cellphone race and get some major market share. IMHO they also need to stick with Bing and Surface and they will see good results in the future. As far as Windows 8 I have had it since release and although I primarily use the desktop and venture into the Start Menu only for games and various news sites I am pleased with it as such. I have a duel boot with 7 & 8 and never go back to 7 except to keep it updated once a month. For better or worse I think this is the future MS will give us; hopefully they will find a way to make it business friendly as well as pleasing to everyday consumers.

Guest said:

Nokia would have been worth more if they did not sign a deal with Microsoft. They could have sold a lot of Android phones. Oh, well. At least this way Microsoft gets them at a third of what they would have been worth.

Archean Archean, TechSpot Paladin, said:

Very amusing to see so many people continuously 'hypothesizing' that Nokia would have sold lot more androids. Whereas, the fact is, except for Samsung, hardly any other android maker makes 'good' money. Hence, Nokia made a logical decision when they went with WP, they knew if they develop the new platform, they will be the top dog in that market, and today, it is very clear that with over 80+% share, they got it right. The weak link in this whole scenario, has been Microsoft. Who has been unable to ramp up its development cycle, and deliver at least one major update to its mobile OS during a calendar year. IF they can fix this (+add some missing features), and also maintain/increase the momentum of WP traction in many European and emerging markets, this may very well be the best decision SB made before his exit.

On Motorola:

Motorola was bought for its patents, nothing more. But Google's aggressive strategy to counter others by aggressively charging for them has ran into trouble (e.g. remember MS v Motorola?).

On the other hand, Motorola is losing hundreds of million $ [link] ).

Teko03 said:

Nokia would have been worth more if they did not sign a deal with Microsoft. They could have sold a lot of Android phones. Oh, well. At least this way Microsoft gets them at a third of what they would have been worth.

Every one can keep saying this, but Nokia would not have had the money to invest in developing its current technology without Microsoft's backing. Nokia was on its deathbed and would not have been able to bring any this to an Android device alone....and Google certainly didn't have any reason to invest millions into getting another OEM on board.

misor misor said:

I hope Microsoft acquires Blackberry too (as rumors suggest).

Archean Archean, TechSpot Paladin, said:

I am not so sure about BB adding any value to MS, except, perhaps BBM can be of some use especially for corporate customers. Incidentally, there are some markets where corporate clients are starting to shift on WP from ............ BB.

misor misor said:

I am not so sure about BB adding any value to MS, except, perhaps BBM can be of some use especially for corporate customers. Incidentally, there are some markets where corporate clients are starting to shift on WP from ............ BB.

maybe MS has some ideas on how to sell BB devices once it acquires BB. last year, if I'm not mistaken, MS has sent 'feelers' to buy BB but the deal did not push thru.

and I'm more comfortable in MS-BB union than Lenovo-BB (conspiracy ).

Guest said:

R.I.P. NOKIA we never forget

Archean Archean, TechSpot Paladin, said:

@misor

+1 on BB-Lenovo thing. I think if for nothing else, BB acquisition can give some ammo to MS (or Apple?) to fight android OEMs.

3 people like this | Razer said:

This is the reason why MS buys Nokia

http://9gag.com/gag/aAYdV9d?ref=fbp

1 person liked this | misor misor said:

This is the reason why MS buys Nokia

http://9gag.com/gag/aAYdV9d?ref=fbp

, good one, @Razer

what if bill gates wants a black phone, would steve ballmer buy 'blackberry'?.

Puiu Puiu said:

Did it? I am still in doubt. For example, MS earns almost a billion $ from android makers in lieu of patent fee. Secondly, Motorola is a minor player outside US and some European markets.

On the contrary, Nokia is the major player in two key areas, I.e. for MS it is WP market share, and in addition to that feature phone business. Nokia in fact has been successful in blurring lines between feature and smartphones with their budget Asha line up, which is still doing very good business in Asian markets.

the key areas you are talking about have no real value in the long run. it's the reason Nokia lost 90% (not 10 not 20 not 50 but 90%!!!!) of it's value. in 2007 nokia had 250bil $ market value and now MS bought the entire mobile part for about 7.2bil...

Hopefully it will mean better windows phones, but MS is not know for fast innovation and quick release schedules. I'm very skeptical that they will be able to do something besides buying a new CEO to replace Ballmer

Archean Archean, TechSpot Paladin, said:

History can only serve as a case study for future reference, for learning.

You are spot on about MS being slow on quick releases. But I think they are trying to change that (e.g. release of 8.1 a year after 8). It is achievable provided they cut red tape.

On a side note, it is apparent that for some years, MS's revenue from patent licensing to OEMs will continue to rise and will be greater than their WP sales.

On the android side of things, in few years I expect Koreans to start loosing market share to Chinese manufacturers. The other day I had a chance to try out Huwaei P6, and I felt its quality of construction materials were far better than what e.g. Samsung offers with its plasticky phones. Although, I must say they've heavily copied iOS's UI concepts, but then again it is the case with many other OEMs.

Razer said:

, good one, @Razer

what if bill gates wants a black phone, would steve ballmer buy 'blackberry'?.

maybe, or Ballmer still buys Nokia and give Bill gates the black color Lumia while Blackberry CEO yelled "why you don't buy from us? why?" hahaha

Puiu Puiu said:

History can only serve as a case study for future reference, for learning.

You are spot on about MS being slow on quick releases. But I think they are trying to change that (e.g. release of 8.1 a year after 8). It is achievable provided they cut red tape.

On a side note, it is apparent that for some years, MS's revenue from patent licensing to OEMs will continue to rise and will be greater than their WP sales.

On the android side of things, in few years I expect Koreans to start loosing market share to Chinese manufacturers. The other day I had a chance to try out Huwaei P6, and I felt its quality of construction materials were far better than what e.g. Samsung offers with its plasticky phones. Although, I must say they've heavily copied iOS's UI concepts, but then again it is the case with many other OEMs.

8.1 is just a service pack that they decided to rename into a point release. the changes don't warrant a year of development.

When they decide to actually release internet explorer feature updates (not bug/security fixes) more than once every 2 years than you can say that they are improving.

Guest said:

? microsoft didnt buy nokia... nsa did...

its just a play for world dominance... they dont care if its good or bad.. they just want to own it and shift revenue to the us....

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