Unless you are living under a cave, you know by now that Microsoft has acquired Nokia’s Devices & Services business, Nokia’s patents, and their mapping services. According to the announcement, Microsoft will pay EUR 3.79 billion to purchase 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. This works out to roughly USD 7.18 billion in cash!
The repercussions of this deal on Global mobile market are going to be huge – It now has 3 distinct strong players who have strengths in mobile hardware as well as OS. Apple with their iOS, Google-Motorola with Android and now Nokia with Windows Mobile OS.
As part of this deal 32,000 employees of Nokia 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.
Nokia acquisition can be termed as end of era, where the brand was an undisputed king from the word go. But in last few years, they were on a downward spiral without much hopes of coming back up. Even then, USD 7.2 billion deal was a much undervalued one! Skype, which was bought by Microsoft a couple years back had higher valuation than Nokia!
Let’s what Industry experts and both companies themselves have to say about the deal.
What Microsoft & Nokia Are Saying About The Deal
Steve Ballmer sent an email to Microsoft employees in regards to the deal. He said:
We are very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together. Our Windows Phone partnership over the past two and half years has yielded incredible work – the stunning Lumia 1020 is a great example. Our partnership has also yielded incredible growth. In fact, Nokia Windows Phones are the fastest-growing phones in the smartphone market.
Microsoft has released a strategic rationale document for the Nokia deal. Here it is:
You may also want to look at a joint Open letter released by Steve Ballmer and Stephen Elop.
What Others Are Saying:
Shira Ovide of Wall Street Journal states:
The deal with Nokia is an apparent acknowledgment that Microsoft needs a stronger hand to play in the mobile-phone business, where it is playing catch-up to Apple Inc. and Google Inc. Microsoft’s lagging position in mobile is one of the most serious threats Mr. Ballmer’s successor will need to tackle. The deal also is a recognition by Nokia that it is better to sell off its smartphone business than take on rivals like Apple on its own.
Steve Kovach of Business Insider states:
This can also be another sign that Microsoft is taking its transition from a software company to a “devices and services” company much more seriously. Until last year, Microsoft did not make any major products (besides the Xbox) itself. That changed with its line of Surface tablets that run the new Windows 8 operating system. The company announced that it was making the transition to a company that provides both devices and services.
But Microsoft has yet to make a smartphone of its own, despite numerous rumors that it had plans to. By buying Nokia, Microsoft now has its own manufacturer that it can work closely with.