Microsoft announced on Tuesday that it has entered into a $7.2 billion transaction with Nokia to acquire all of its devices and services business, including the Lumia smartphone lineup and mid-range Asha brand. Microsoft has also agreed to a ten-year license of Nokia’s patent portfolio, and a four-year license of Nokia’s mapping services.
This is a substantial move for Microsoft, which gains the consolidated hardware and software experience that competitors like Apple have long benefitted from. Moreover, it means that we’ll no longer be seeing a Nokia-branded smartphone on store shelves for at least the next three years, as the Finnish handset maker is restricted to using the moniker on feature phones only.
“It’s a bold step into the future – 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,” said Steve Ballmer, Microsoft chief executive officer.
“In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.”
Microsoft is currently undergoing significant changes as a company that, while still a dominant force in the enterprise, has been rather ineffective at — outside of the Xbox console — selling own-brand hardware. Windows Phone and Surface are two key examples of devices that have only gained a fraction of the market share alongside Apple and Google.
With the impending departure of Microsoft CEO Steve Ballmer, it has been speculated that Stephen Elop, who has stepped down as Nokia CEO to head Microsoft’s improved devices decision, could become the chief executive of the Redmond-based company.