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Microsoft to acquire Nokia's smartphone business

68
Nokia's recent flagship smartphones use Microsoft's mobile operating system Windows Phone 8.

Microsoft is moving forward with a deal to purchase Nokia's Devices and Services business for $7.2 billion (€5.44 billion)

The Finnish hardware maker's mobile phone division has been struggling since the dawn of the smartphone era, recently reporting a $150 million revenue loss even after surging sales of its Lumia line of Windows Phone 8 smartphones.

For Microsoft, the acquisition is an opportunity to unify its mobile brand. Aside from the HTC 8X, all licensed Windows Phone 8 devices are Nokia-made. So now, instead of seeing Nokia ads for individual devices and Microsoft ads for the mobile operating system, we will likely see combined marketing.

From Microsoft's press release:

Under the terms of the agreement, 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.

[...]Building on the partnership with Nokia announced in February 2011 and the increasing success of Nokia’s Lumia smartphones, Microsoft aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing. For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.

[...] At closing, approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide. The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9 billion, or almost 50 percent of Nokia’s net sales for the full year 2012.

Microsoft is acquiring Nokia’s Smart Devices business unit, including the Lumia brand and products. Lumia handsets have won numerous awards and have grown in sales in each of the last three quarters, with sales reaching 7.4 million units in the second quarter of 2013.

By selling its mobile phone division, Nokia is using the opportunity to trim away a profitless part of the company to focus on other, more lucrative areas like its telecommunication and mapping technology. 

From Nokia's press release:

Following the transaction, Nokia plans to focus on its three established businesses, each of which is a leader in enabling mobility in its respective market segment: NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing. At closing, this transaction is expected to strengthen Nokia's financial position and provide a solid basis for future investment in these three businesses.

The acquisition is expected to close in the first quarter of 2014, allowing Microsoft to speed up the progress of its Windows Phone 8 devices. Retiring Microsoft CEO Steve Ballmer has said that sharing intellectual property rights between the two companies has slowed down development in the past.

With 32,000 new Nokia employees across technology and production teams, Microsoft will have the entire Lumia staff at its disposal. 

Comments

Total comments: 68
Keith Harrison
By Keith Harrison (Sep 6, 2013)

Microsoft haters shout loud, but they may just keep that Nokia quality going. I have the 800 and hope to soon update to the 1020. WP is great, me office on a mobile is cool. ;-) no a me cannot, but it does a good job, Nokia apps are good too.

0 upvotes
Sergey Borachev
By Sergey Borachev (Sep 5, 2013)

Nokia had a chance to save itself, if it had gone Android instead of Window. So long.

Who wants to buy Microsoft stuff, if they still have a choice. In desktop, they don't have a choice. In everything else, people will resist buying anything Microsoft.

1 upvote
Vallkar
By Vallkar (Sep 5, 2013)

May be you would, I wouldn't.

1 upvote
peevee1
By peevee1 (Sep 4, 2013)

Just as I suspected, Elop was the Trojan horse sent to Nokia to decrease its market value making it cheaper acquisition target for Microsoft.
I would not be surprised if shareholders' lawsuits will follow soon.

3 upvotes
KW Phua
By KW Phua (Sep 4, 2013)

I feel sad about Nokia which was the leader until iPhone changed the game. However, Nokia and Apple spent too much in RnD and eventually will be beaten by smart copycat that spent less and earn more.

0 upvotes
Todd Ka
By Todd Ka (Sep 4, 2013)

This will be fine as long as MS does not screw the hardware up.
Nokia touch screens are the only ones that seem to work for me reliably.
The MS OS is also excellent.
Smooth, efficient, uncluttered. I don't ever want to go back to android.

6 upvotes
B1ackhat
By B1ackhat (Sep 4, 2013)

That makes sense since Nokia were virtually the only ones pushing Microsoft's crappy phone OS.

2 upvotes
Nukunukoo
By Nukunukoo (Sep 4, 2013)

Wasn't it like almost two years ago when Elop said MS had no interest in buying Nokia's division? Everybody said "yeah, right". Everyone knew it was the plan all along.

At least maybe now, MS can fight Android from evolving into a Serious Desktop OS and continued Smartphone OS dominance by challenging (or extor- er- "charging") Google with several patent properties.

Comment edited 5 minutes after posting
0 upvotes
Keith Harrison
By Keith Harrison (Sep 4, 2013)

This week Microsoft buys Nokia maybe they could buy Olympus next week

0 upvotes
Langusta
By Langusta (Sep 4, 2013)

Another one bites the dust...

0 upvotes
yabokkie
By yabokkie (Sep 4, 2013)

looking forward to seeing a Msft 808 PureView of 80.8MP.

0 upvotes
massimogori
By massimogori (Sep 4, 2013)

Nokia has an history as a camaleon company: they used to make boots, toilet paper, TV sets, mobile phones.

Now they are joining the world leader in a very profitable market: software bugs.

0 upvotes
Menneisyys
By Menneisyys (Sep 4, 2013)

"Now they are joining the world leader in a very profitable market: software bugs."

Well, many things can be said about WP8; most importantly, it's being far too closed and restrictive.

However, something is certain: it's in no way buggy. It's VERY stable and dependable.

4 upvotes
massimogori
By massimogori (Sep 4, 2013)

Menneisyys, I frankly cannot say anithing against windows phone 8, as I do not know it. I therefore assume you are right.

I am confident, however, that Microsoft has all the capabilities to introduce enough bugs in the new releases to put WP8 on par with the rest of their software.

1 upvote
zonoskar
By zonoskar (Sep 4, 2013)

Windows Phone 8 is already made by Microsoft, so why would you think they'll introduce bugs now they've acquired Nokia?

2 upvotes
massimogori
By massimogori (Sep 4, 2013)

A scorpion and a frog meet on the bank of a stream and the scorpion asks the frog to carry him across on its back. The frog asks, "How do I know you won't sting me?" The scorpion says, "Because if I do, I will die too."

The frog is satisfied, and they set out, but in midstream, the scorpion stings the frog. The frog feels the onset of paralysis and starts to sink, knowing they both will drown,but has just enough time to gasp "Why?"

Replies the scorpion: "It's my nature..."

Comment edited 4 times, last edit 1 minute after posting
1 upvote
Menneisyys
By Menneisyys (Sep 4, 2013)

(nm)

Comment edited 33 seconds after posting
0 upvotes
Henrik Herranen
By Henrik Herranen (Sep 4, 2013)

I think most, if not all of you, are missing the point.
Nokia's big error was not making Windows phones intead of Android/Meego/ChooseYourPick. One of the biggest errors was abandoning all other platforms one year before they could produce a "new and shiny" phone worth selling.
In February 2011 Stephen Elop wrote The Memo, where he told that all Nokia's current products are, well, crap. Then he continued to tell that all other platforms are going to be abandoned, regardless of whether will sell or not. Unsurprisingly, Nokia smartphone sales, still profitable, stopped.
To make it worse, the first Lumia wasn't available before almost a year after that. So Nokia had "nothing" to sell.
It can easily be argued that Nokia shouldn't have made an exclusive deal with Microsoft. Sure, make Windows phones, but also make Meego, Android, and others, then see which ones sells. A company the size of Nokia two years ago could easily have afforded that. And all eggs wouldn't have been in one basked.

4 upvotes
Henrik Herranen
By Henrik Herranen (Sep 4, 2013)

To continue: also the argument that Symbian was dead isn't really an argument. Nokia knew that Symbian's lifespan was coming to an end (although Symbian phones still outsold Windows phones just one year ago, though that tells more about Windows than Symbian sales). That's why they were developing the new operating systems. But the Microsoft mole Elop, along with the blessing of an almost criminally incompetent Nokia board, killed all of that development.
So sure, Nokia was in a phase of transition when Elop took over late 2010. Still, the whole company was still highly profitable at the time, and sold more smartphones than the two next competitors, Samsung and Apple, combined.
Dislike Symbian as much as you want, but when Elop took over, Nokiat was NOT a company at the brink of death.

Comment edited 54 seconds after posting
5 upvotes
zodiacfml
By zodiacfml (Sep 4, 2013)

It's a play masterminded by MS.
I'm baffled when Nokia just abandoned everything while the rest of the world were fine with Nokia phones including Symbian.
Nokia, at worse, could have been second place versus Samsung in the smartphone market with Android and other operating systems; and slowly leave Symbian as everyone steadily upgraded to smartphones.

MS is just old, too slow for Google, Apple. This acquisition changes little, it only appears good in paper; Unless, if this will mean lower prices of Nokia handsets and MS devices which I think is the only way to gain market.

2 upvotes
CameraLabTester
By CameraLabTester (Sep 4, 2013)

Tsk, Tsk, Tsk

Just when Nokia was about to take off from the doldrums...

This could be the start of a beautiful slow motion trainwreck...

.

5 upvotes
kodachromeguy
By kodachromeguy (Sep 4, 2013)

Selling any product with a Microsoft operating system nowadays must be a challenge when there are reasonable alternatives, as there are in smartphones. Even in the office, I can't think of anyone who voluntarily chooses Microsoft; they are forced to use it.

2 upvotes
RichRMA
By RichRMA (Sep 4, 2013)

So how does this work, exactly? Microsoft buys Nokia, then writes off the losses, which means they pay less tax than they should, which means somewhere down the line the average taxpayer picks up the slack?

0 upvotes
Misa
By Misa (Sep 3, 2013)

This was not good to Nokia from the beginning, all Microsoft do is to buy cool stuff from other to ensure it doesn't grow as competition when all they need is to shake them self and star being original and friendly to the end user's will instead of trying to rip the money, personal information and how knows what else from the customer.

0 upvotes
Tom Caldwell
By Tom Caldwell (Sep 3, 2013)

I hope they get a return on their investment. This sort of limits their ability to sell on price.

0 upvotes
Rachotilko
By Rachotilko (Sep 3, 2013)

The single most important reason leading to Nokia demise was the rise of Android. Google was smardevelopment model to make two crucial desisions:
- invite Asian manufacturers to join Android production by offering attractive licensing conditions.
- well chosen subset of Java as the primary development environment.

This contrasted sharply with Nokia's Europe based manufacturing and unfortunate choice of l tools offered to application developers (the options being rather exotic dialect of C++ for native development or the very crippled Java in the form of J2ME runtime).

The situation was not helped by Nokia's distracting and consufed encounters with the open source movement: neither the brief episode of open-sourcing the Symbian nor absurd migration of traditional desktop Linux to smartphone environment (MeeGo) produced any business value for Nokia.

It's so human to look for scapegoats, but the truth is that Nokia was doomed before Stefan Elop became its CEO.

0 upvotes
dccdp
By dccdp (Sep 3, 2013)

Nokia would have had a much better chance if it had tried Android instead of the tiny (market-wise) Windows Phone. But Elop's arrival obviously made this impossible (him being a Microsoft guy and all)...

Some believe it would have stil have been OK if MS Elop didn't cancel the already finished MeeGo, which was a promising project Nokia could have controlled in-house. MeeGo was far from being "confused", as you say, Elop canceled it just when it has started to pay off (it was ready, mature, a lot of work and money was disregared by Elop's personal bias).

And selecting an already struggling WinPhone OS (unproven to the market) as a solution for "reviving" Nokia was questionable to say the least.

1 upvote
Michaels7
By Michaels7 (Sep 3, 2013)

It's not just Android. Apple played a role in this too. Just look at Black Berry. Google was smart and jump on it when the smart phone was in it's early stages. Black Berry played that marketing myopia, not changing their product for a long time. Now they're trying and it's pretty much too late. Apple and Android pretty much own the market. I don't know what Microsoft's goals are, but it's gotta be something different and appealing.

0 upvotes
Silvarum
By Silvarum (Sep 4, 2013)

@dccdp: I Agree with you on Meego, but making Android phone that will be somewhat different and appealing than billion other devices on the market is not easy. Just because Android market is big, doesn't mean Nokia's share of it would have been big too.

1 upvote
alexzn
By alexzn (Sep 3, 2013)

Despite what the armchair experts on this site are saying, this move makes a lot of sense. To survive in the smartphone business you need to be a software company (this is what Jobs said about Blackberry and he was right). Nokia could only survive and keep its identity if it used Android and that meant competing on cost with Samsung (not going to happen). So Microsoft was the only natural partner and a sale made a lot of sense. Windows Mobile is actually a terrific phone OS. Use it before sh&tting on it. No apps, which is a huge bummer, so it will be an uphill climb.

10 upvotes
dccdp
By dccdp (Sep 3, 2013)

This is why Elop shouldn't have canceled the MeeGo project at Nokia at the time it was just ready for the market. Nokia has (eh, had) a huge experience in software, in fact, as we're talking about mobile software, much more than Microsoft ever had.

Remember, Microsoft is still struggling to become a name in the mobile market, and the excellent engineers Nokia had and recently let go will never return to the new enterprise MSFT tries to build.

Comment edited 35 seconds after posting
0 upvotes
Michaels7
By Michaels7 (Sep 3, 2013)

Windows Mobile is good. Most are either Android or Apple. Even webOs struggled in the smart phone marketing and imo, they have a better mobile o.s. Windows is hurting itself with this latest mobile to desk and laptop integration due to the function on the home computer and laptop. It's terrible and doesn't work the same like on the mobile.

0 upvotes
Eric Hensel
By Eric Hensel (Sep 4, 2013)

Have you used the new Windows on a laptop with touchscreen? Try it and you will understand.

4 upvotes
agentul
By agentul (Sep 4, 2013)

"To survive in the smartphone business you need to be a software company (this is what Jobs said about Blackberry and he was right)."

yes, he was right, and we were just holding the phones in a wrong way. software without hardware is nothing.

0 upvotes
Chris Dodkin
By Chris Dodkin (Sep 3, 2013)

Wow - Elop Trojan Horse trick worked then - devalued Nokia to the point where MS were prepared to pick them up for a song.

What a play - ad in the full public gaze as well!

Doomed to fail long term - as the MS product is truly terrible, and their hardware attempts have been mediocre at best

1 upvote
Menneisyys
By Menneisyys (Sep 3, 2013)

"Doomed to fail long term - as the MS product is truly terrible, and their hardware attempts have been mediocre at best"

You haven't ever used a Surface Pro (not the indeed mediocre 1st-gen RT tablets), I take it....

3 upvotes
Vladik
By Vladik (Sep 3, 2013)

Devalued?? Since when 6 Billion dollars is a song?? What world are you living in?! :D

2 upvotes
dccdp
By dccdp (Sep 3, 2013)

@Vladik: 6 billion dollars is cheap for a company with Nokia's size and portfolio. Brands, patents, experience, knowledge, network, etc. Think what you wish, but Nokia is/was huge in the mobile phone market, globally (and this does mean the entire world, not just US or Europe).

The amount Nokia asked for was about 20 billion, so 6 is indeed a song.

3 upvotes
zodiacfml
By zodiacfml (Sep 4, 2013)

Song indeed. It's very easy for Nokia to go with Android for smartphone OS and be close second to Samsung. Yet, it didn't happened and accepted Microsoft's offer.

0 upvotes
joe6pack
By joe6pack (Sep 3, 2013)

There goes innovation.

4 upvotes
Menneisyys
By Menneisyys (Sep 3, 2013)

Let's wait and see what happens. I don't think MS will fire for example the Imaging people. I think it's basically the owner that changes but not much else. After all, Nokia has an established (and excellent!) set of hardware engineers (mostly Finns) - MS would have a hard time finding other engineers to replace them.

All in all, I'm optimistic.

3 upvotes
dccdp
By dccdp (Sep 3, 2013)

@Menneisyys

Actually, a lot of Nokia's engineers already fled since Elop had taken over, so it may already be too late, unfortunately.

1 upvote
Tom Caldwell
By Tom Caldwell (Sep 3, 2013)

A firmware update every time you switch the smartphone on? (grin)

0 upvotes
AbrasiveReducer
By AbrasiveReducer (Sep 4, 2013)

I don't think you'll find too many people who have a choice working for Microsoft.

0 upvotes
Menneisyys
By Menneisyys (Sep 4, 2013)

"Actually, a lot of Nokia's engineers already fled since Elop had taken over, so it may already be too late, unfortunately."

Still, there's only one place where there is hardware design and engineering competence: in Finland. You'll hardly find any electronic engineer without a current job that, say, has years of experience of low-level JPEG encoding in assembly or antenna design. This is why I don't think the engineering et al will be fully relocated from Finland to the US, at least not in the next few years.

Comment edited 24 seconds after posting
0 upvotes
zodiacfml
By zodiacfml (Sep 3, 2013)

Unbelievable. Nokia "was"...

1 upvote
Petrogel
By Petrogel (Sep 3, 2013)

Trojan Horse .......... Stephen Elop ? NO !!!!!!

5 upvotes
06m1r3m86
By 06m1r3m86 (Sep 3, 2013)

Nokia's Pureview system looks awesome, but I have no desire to use the Windows Phone OS or Windows 8. Personally, I wish all phone OS's were a little more open, I don't like having apps forced onto my phone that I can't remove, I don't like having a UI that I can't change to work better for me.

3 upvotes
Menneisyys
By Menneisyys (Sep 4, 2013)

Agreed. WP8 is just too simple and restrictive for me, while I love Symbian's power, openness and, compared to WP8, in many ways vastly superior features.

0 upvotes
06m1r3m86
By 06m1r3m86 (Sep 13, 2013)

Not sure if you're being sarcastic about symbian or not. Personally, I'm not too fond of iOS or WP8, nor am I happy with apps that are forced onto my Android. That being said, I'd love to see more Nexus devices that are pure Android, and a higher uptake of CyanogenMod on phones so that the phone isn't controlled by the manufacturer or the carrier.

0 upvotes
KariIceland
By KariIceland (Sep 3, 2013)

RIP NOKIA!
GOD DAMN YOU MICROSOFT! GOD DAMN YOU! YOU KILLED NOKIA!

6 upvotes
tkbslc
By tkbslc (Sep 3, 2013)

I think it was Symbian.

4 upvotes
Menneisyys
By Menneisyys (Sep 3, 2013)

"I think it was Symbian."

Yup, it was both Symbian and some of the very bad decisions of Nokia's leaders.

Basically, they played the "let's leave out some features from out phones" and "let's keep two strictly distinct (E vs. N) lines" game, which is just not competitive when there are strong contenders out there.

Also, both the N96 an dthe N97 / N97 Mini were disastrous. Particularly RAM-wise (and, with the N96, 3D HW acceleration-wise) seriously underpowered handsets. After the absolutely excellent N95, they were huge letdowns alienating a LOT of customers & fans - back in as early as 2008/2009, well before Elop's coming.

Symbian had, basically, the same fate as Windows Mobile. Both were, compared to iOS / WP, open, excellent and very powerful OS'es loved by techies and geeks. This, however, proved to be their destiny as well - they were just too confusing for the Average Joes and particularly technofobes. And, unfortunately, 99.9% of the phone users belong to this category...

Comment edited 5 times, last edit 9 minutes after posting
0 upvotes
Silvarum
By Silvarum (Sep 4, 2013)

Nokia had whole department working on symbian and they couldn't make competitive OS. I think it was a good decision to stick with WP.

0 upvotes
Menneisyys
By Menneisyys (Sep 4, 2013)

"Nokia had whole department working on symbian and they couldn't make competitive OS. I think it was a good decision to stick with WP."

Yup, it was just too convoluted for average people. Even I (an uber-geek with 20+ years of mobile experience) have a hard time sometimes finding where, say, a particular setting can be changed. In this regard, iOS and WP8 are far better.

Too bad simplicity, with iOS and WP8, not only means suitability for 99% of the people (see sales figures and the fate of Windows Mobile / Blackberry), but also being devoid of even basic features.

0 upvotes
Sonyshine
By Sonyshine (Sep 3, 2013)

Since when did two turkeys make an apple?

I feel sorry for Nokia - OK they sitting in a mess of their own making but most of us have fond memoies of our first Nokia smartphone - unlike Microsoft where our early memories are of slow computers constantly crashing and the Blue Screen of Death.

I fear this will end in tears for all concerned.

Comment edited 44 seconds after posting
1 upvote
unknown member
By (unknown member) (Sep 3, 2013)

If only. I suspect Microsoft will somehow manage to churn on, despite hiring Elop as a senior VP.

Imagine that a former Sony executive took the helm at Fuji, and announced that, henceforth, Fuji would scrap the things that make Fuji's R&D stand out (EXR, X-Trans, organic processor, Fujinon lenses, etc.) and simply release variations of technology developed by Sony.

That's what Elop did to Nokia, and it's no wonder Microsoft rewards him with a VP position: in 2 1/2 years he brought the share price down to a point where Microsoft could buy its own phone hardware division, rather than build one itself -- taking out competition in the process.

2 upvotes
Zograf
By Zograf (Sep 3, 2013)

In addition to EXR and X-Trans don't forget Fuji's Honeycomb Super-CCD Sensor perhaps the most unique and film like (with S+R sites) quality one.

0 upvotes
AkinaC
By AkinaC (Sep 3, 2013)

but now when i'm using Microsoft's Windows 8 i'm not crashing or getting blue screens anymore, those blue screen days are properly last seen on XP...I rather have better "now" than good old past.

Hope WP getting more apps, then i'll happily switch to Nokia-blood Microsoft phones XD (that sounds wierd

1 upvote
Menneisyys
By Menneisyys (Sep 3, 2013)

"That's what Elop did to Nokia, and it's no wonder Microsoft rewards him with a VP position: in 2 1/2 years he brought the share price down to a point where Microsoft could buy its own phone hardware division, rather than build one itself -- taking out competition in the process."

IMHO it isn't (necessarily) Elop that crashed Nokia but

- a series of VERY bad decisions since 2008 (N96 etc.)

- Symbian's being just too complicated for the average user

0 upvotes
MdNvS
By MdNvS (Sep 4, 2013)

As a satisfied Symbian user I have no idea where to go next. I tried Android and iOS but they don't have stuff I'm used to having. I guess maybe some day if I can't replace my Symbian phone I'll have to get an old feature phone and a... gasp... "real" camera...

3 upvotes
LensBeginner
By LensBeginner (Sep 10, 2013)

what stuff you could possibly want that was in Symbian and isn't in Android?
Only thing that comes to mind is a pedometer...

0 upvotes
tkbslc
By tkbslc (Sep 3, 2013)

Maybe with their own company, Microsoft can gain some traction on the phone and tablet market. They really do have a nice mobile OS.

9 upvotes
MdNvS
By MdNvS (Sep 4, 2013)

Except now they can't count on people who bought WP8 phones just because they wanted and trusted Nokia (who sells... sorry, sold more than 80% of all WP8 phones).

1 upvote
Silvarum
By Silvarum (Sep 4, 2013)

@MdNvS: Why not? What's the difference to me what brand name is printed on the phone?

0 upvotes
agentul
By agentul (Sep 4, 2013)

@Silvarium: the Nokia brand stands for quality and durability. we can't know if MS would decide to just cut some costs and make lower quality phones in the hope that people would upgrade more often, thus raising their sales.

0 upvotes
SWSF14
By SWSF14 (Sep 3, 2013)

I should be shedding a few tears shortly. I was hoping for Android OS to revitalize Nokia.

4 upvotes
Silvarum
By Silvarum (Sep 4, 2013)

Android market is already occupied by Samsung, HTC and Sony. What's the point being another player? If Nokia had gone with Android they'd sink to the point where even Microsoft wouldn't wanted them.

1 upvote
Total comments: 68
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