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Nov 8 / Robert Vanalstyn

Nokia Sells Mobile Device Unit to Microsoft

On September 03, 2013, Nokia announced the sale of their Devices & Services business and license its patents to Microsoft. The two companies signed an agreement for £5.44 billion and the sale is expected to be concluded in the first three months of 2014.

Deal terms:

  • Of the total £5.44 billion deal, £3.79 billion goes to Devices & Services, and the remaining £1.65 billion goes to patent agreement and future options.
  • Nokia has agreed to give 10 years license to Microsoft to use its Nokia brand on current mobile phones and subsequently to develop products of series 30 and series 40 operating system.
  • According to Nokia, the number of their employees expected to be transferred to Microsoft is about 32,000. Nokia’s CEO Stephen Elop is going to replace Microsoft’s CEO Steve Ballmer. (In August 2013, Ballmer announced his plan to retire within a year)

Nokia’s future plans:

  • Following the deal, Nokia is planning to focus on other three important businesses:
    • NSN, a leader in network infrastructure and services
    • HERE, a leader in mapping and location services
    • Advanced technologies, a leader in technology development and licensing

Reasons for the sale:

  • Nokia’s perspective:
    • In the mobile market, Nokia dominated for 14 years. But in recent years, Samsung emerged as the world’s biggest mobile phone maker with a market share of 95% in the Android smart phone sector. Whereas Nokia has just 3% of Windows smart phone.
    • A decade ago, Nokia had Symbian, but it didn’t work out. Instead of that, if it went for Android, the scenario would have probably been different.
  • Microsoft’s perspective:
    • Microsoft, world’s largest software maker struggled to gain significant market share for its Windows phone. Last year, it launched surface Tablet PCs, but sale of these devices has been relatively low.
    • Stephen Elop says “Building on our successful partnership, we can now bring together the best of Microsoft’s software engineering with the best of Nokia’s product engineering, award-winning design, and global sales, marketing and manufacturing.”
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