Microsoft Is Buying Nokia's Devices Business

Microsoft has announced its intention to purchase Nokia's Devices and Services business wholesale. Get ready for the era of Microsoft Lumia Phones.

In a post on the official Microsoft blog there's an open letter from Steve Ballmer and Stephen Elop that runs through the basics of the deal. From Microsoft's side:

Building on this successful partnership, we announced some important news today: an agreement for Microsoft to purchase Nokia’s Devices & Services business, to deliver more choices, faster innovation, and even more exciting devices and services to our customers.
Today’s agreement will accelerate the momentum of Nokia’s devices and services, bringing the world’s most innovative smartphones to more people, while continuing to connect the next billion people with Nokia’s mobile phone portfolio.
With the commitment and resources of Microsoft to take Nokia’s devices and services forward, we can now realize the full potential of the Windows ecosystem, providing the most compelling experiences for people at home, at work and everywhere in between.

"We plan to pursue a single set of supporting services for our devices, and we will figure out how to combine the great Nokia efforts into our Microsoft services as we go through the integration process."

In an email to Microsoft employees, Ballmer expands out the detail:

1. Stephen Elop will be coming back to Microsoft, and he will lead an expanded Devices team, which includes all of our current Devices and Studios work and most of the teams coming over from Nokia, reporting to me.
2. Julie Larson-Green will continue to run the Devices and Studios team, and will be focused on the big launches this fall including Xbox One and our Surface enhancements. Julie will be joining Stephen’s team once the acquisition closes, and will work with him to shape the new organization.
3. As part of the acquisition, a number of key engineering leaders will be joining Microsoft from Nokia, reporting to Stephen in his new capacity: · Jo Harlow, who will continue to lead the Smart Devices team · Timo Toikkanen, who will continue to lead the Mobile Phones team · Stefan Pannenbecker, who will lead Design · Juha Putkiranta, who will lead the integration effort on Nokia’s behalf
4. Regarding the sales team, we plan to keep the Nokia field team, led by Chris Weber, intact and as the nexus of the devices sales effort, so that we can continue to build sales momentum. After the deal closes, Chris and his team will be placed under Kevin Turner. We will develop a single integrated team that is selling to operators, and there may be other integration opportunities that we can pursue. Kevin will work with Chris Weber and Chris Capossela to make those plans.
5. Our operating system team under Terry Myerson will continue unchanged, with a mission of supporting both first-party and third-party hardware innovation. We are committed to working with partners, helping them build great products and great businesses on our platform, and we believe this deal will increase our partner value proposition over time. The established rhythms and ways of working between Terry and his team and the incoming Nokia team will serve us well to ensure that we do not disrupt our building momentum.
6. We are planning to integrate all global marketing under Tami Reller and Mark Penn. It is very important that we pursue a unified brand and advertising strategy as soon as possible.
7. Finance, Legal, HR, Communications, DX / Evangelism, Customer Care and Business Development will integrate functionally at Microsoft. Sourcing, customer logistics and supply chain will be part of Stephen’s Devices organization. ICM / IT will also integrate functionally for traditional IT roles. We will need to work through the implications for factory systems given the differing manufacturing processes and systems at both Nokia and Microsoft.
8. We plan to pursue a single set of supporting services for our devices, and we will figure out how to combine the great Nokia efforts into our Microsoft services as we go through the integration process.
9. There are no significant plans to shift where work is done in the world as we integrate, so we expect the Nokia teams to stay largely in place, geographically.
10. Tom Gibbons will lead the integration work for Microsoft.


Also:

Nokia 1020 Review: At Last A Terrific Camera In A Great Phone


Meanwhile, from Nokia's side:

Nokia will now write its next chapter, focused on enabling mobility through its leadership in networking, mapping & location, and advanced technologies. 

There's no mention of terms of the deal within the post, however Nokia states in its own release that the deal is worth 5.44 Billion Euros — all in cash.

Further from that 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.
At closing, approximately 32,000 people are expected to transfer to Microsoft, including approximately 4,700 people in Finland.
"Today is an important moment of change and reinvention for Nokia and its employees," said Nokia Chairman and interim CEO Mr. Siilasmaa. "With our strong corporate identity, leading assets and talent, and from a position of renewed financial strength, we will build Nokia's next chapter."

What do you reckon? It's long been mooted that Microsoft would jump this way in buying out Nokia, and now it appears to be finally here.

Then again, Microsoft's history in buying up phone makers hasn't always ended well — anyone remember Danger?


[Microsoft Blog]


Comments

    To be honest, I kind of knew this would happen sooner or later. From a marketing standpoint, Windows Phones are now almost synonymous with the Nokia Lumia series. This is an excellent opportunity for Microsoft to perfectly marry hardware and software to make some kick-ass phones with excellent user interactivity, just like Apple does.

      8 Billion seem's cheap. Like Tijuana prostitute cheap.

      Blackberry must be worth about $2.50 then.

    OMG This might actually be perfect

    maybe that's why Balmer had to go... so they can make Elop CEO once the deal is done and dusted.

      Exactly what I was thinking... this is their opportunity to give him a quick test run first.

    Will it be the same people/factories making them, just under a new parent company? As long as they stay rock solid.

      It appears so by the press release. "32000 Nokia staff will become Microsoft staff, including 4,700 in Finland."

    I think this is a great idea. Exciting times ahead......I hope.

    An incredibly sad day for Nokia fan's. I was holding out hope that Nokia would wake up and start producing Android phones so I could consider moving back off Motorola and Sony devices. Now the Nokia brand is dead and buried forever with Microsoft OS being a permanent deal breaker for my mobile products.

      An incredibly sad day for Nokia fan's.

      Judging by your comment, I think you mean Android fans. Because as a Nokia fan and WP8 device owner, this is an awesome day for me.

      Last edited 03/09/13 2:33 pm

        As a Nokia and Windows Phone fan this is a sad day for me. Nokia put a LOT of work into filling the gaps in Microsoft's ecosystem, I couldn't imagine owning a HTC or Samsung WP8 device which only had Microsoft's lazy approach to progress going for them.

        Without the confidence that will keep happening I'm not sure if I'm quite as excited to stay with Windows Phone for the future.

        As a Nokia Fan i am sad. Ive been said since Feb 11 when the Nokia Microsoft deal was announced and Meego and Symbian Died along with innovation

          If you think there hasn't been innovation in the Lumia series then I'll call bias.

    So from what is reported elsewhere Microsoft is "only" buying devices and manufacturing of said devices but not the patent portfolio. It's not like Microsoft had a choice really. With Nokia the only company worth mentioning building Windows Phone phones it's unthinkable of what would have happened had they either abandoned Windows Phone for Android or been bought out by someone else.

      Missing from this article it that Microsoft is paying EUR 1.65 billion to license Nokia’s patents.

    This is an interesting point you make. I have a colleague that used to work in the Copenhagen office of Nokia in the network division who still maintains contact with colleagues in the company. Apparently there was some momentum in Nokia for a two operating system approach and that designs had been made in lower areas of mobile design for an Android handset as a back up option for after Elop left the company. This was a contigency plan in case after Elop left the new CEO decided to make the switch to Android. I would love to get my hands on that prototype.

    I would say that Microsoft has seen this may have happened and have moved to block the back exit.

    Looks like we'll be seeing Surface Tablets in Mobile Carrier's stores (MS leveraging Nokia's sales channels).

    Also, here's hoping we see a Nokia/Microsoft Lumia/Surface phone. That'd be one slick machine, as long as it's a bit slimmer than the 920/Surface Pro.

      Personally I'd think Microsoft might even drop the Surface RT and replace it with a Nokia tablet.

        Agreed, but I like the idea of having a 'fun' range (brightly coloured Asha/Lumia) and 'serious' range (dark metallic surface range).

        If it were available, I'd pick a Surface styled phone (http://bit.ly/1fvJIUy) over my Nokia Lumia 920 in black.

          I'm personally hoping a plastic tablet will mean they can package 3G/4G and GPS which they said they couldn't do with the Surface magnesium body. That'll very quickly be the entertainment unit in my car with Nokia Drive :)

    Very mixed on this personally, I love my Nokia Lumia, I love Windows Phone 8, but I hate Windows Phone 8 without Nokia's proactive attitude toward gap filling with Nokia software.

    So, Google has Motorola and MS has Nokia. Can't say I'm surprised, although it would have been nice for Nokia to be able to survive on its own. I just hope that this doesn't mean the end for non-Lumia devices.

      I'd have to say that Microsoft certainly got the better of the two manufacturers

      I'm basing this assertion on my opinion that the phones they produced pre-smartphone days like how the 5110, 3310 and 3315 were better than the Motorola equivalents.

    Microsoft destroyed Nokia using Elop, then bought it for little money.

    There would be no incentive for the likes of HTC and Samsung to build Windows Phone anymore, because they simply cannot compete with the free OS that Nicrosoft is getting.

      But... neither's really put much effort into WP anyway -.-

      .. well, HTC did more than Samsung as the phones were custom designed and not rebadged android phones, and MS were willing to consider HTC's 8X a "signature WP device" but both are trying to gain brand recognition through Android

      Fair point. From memory, ASUS and Acer have left, or all but left, the RT device market. I cannot imagine any company wanting to stay in the WP market for too long.

      Nokisoft.

      How does this work out in terms of Nokia's share price?

      Free OS, isn't that what Google does? So this will be a good thing.

      Last edited 03/09/13 6:10 pm

    R.I.P Nokia.

    This is shocking news and I'll bet half those Nokia employees will on the scrap heap within a year.

      More like RIP Symbian 1989 -2013
      Good bye to Symbian and good riddance bloody Asha this Asha that asha symbian Espoo was still churning out Symbian units as we speak the new Nokia 515 Symbian on brush metal, omg when is this Symbian going to stop and die!
      Google bought Motorola so fair enough Microsoft buys Nokia but Nokia sheer market capitalisation means a huge opportunity for Microsoft.

      Last edited 03/09/13 5:47 pm

        Symbian was great for developing markets and for people who needed something cheap and simple. IMO it was the best of the featurephones and I really like it for what it is, the others just feel cheap in comparison.
        I hope it won't die just because it is not needed in developed countries, leaving developing countries with either no good phones for their price range or smartphones for the people better off than most in that respective country.

        Asha is Series 40, not Symbian.

        Symbian unfortunately died with the 808, but at least it went out with a bang.

      To be honest I don't think this really hurts their job security given how Nokia has been performing over the past few years. The last 12 months were more positive, but they haven't had the best of times and have already gone through mass layoffs.

    OK ... As I see it we have 4 players on the field
    Samsung with Android, who are looking at going solo with their own OS
    Apple with iOS which will never change
    Microsoft with a Nokia handset and W8
    HTC which will probably stick with Android

    So Let the games begin....

    My only Nokia phone was the 8210, a solid little phone. Then I moved to the Sony Ericsson, and the vastly superior and cheap on pre paid T610. The OS was a lot better.

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