Microsoft Acquires Nokia Phone Business For $7.2 Billion

By | 3 years ago 

Microsoft just pulled off the most epic company takeover ever or Stephen Elop is genius or both. Let’s back up a bit and recap some important historical moments leading up to today’s announcement that Microsoft has just acquired the mobile phone division of Finnish Telecommunications giant Nokia.

After working for years as a key executive at Microsoft, Stephen Elop joined Nokia three years ago to become its CEO and he made his mark by immediately tossing out the company’s proprietary phone operating systems and switching over to Microsoft’s Windows 7 platforms. For obvious reasons, this resulted in a lot of cynicism, even if Nokia needed to make that sort of change.

With his history at Microsoft before becoming the first non-Finnish leader of Nokia, his immediate decision to move the company towards Microsoft’s operating system and the company’s consistent and rapid decline in marketshare, skeptics began to wonder and question whether it’s possible – even in the slightest – that he was prepping Nokia for some sort of Microsoft takeover but he denied such claims, explaining that Nokia’s management was also involved in the operating system change decision.

As we know now, the OS change didn’t turn Nokia’s downward trend around, essentially putting Elop on the chopping block, which makes it all the more interesting that Microsoft announced today that they’ve acquired the company for nearly $7.2 billion dollars. Says Elop in regards to the announcement:

“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. With this combination of talented people, we have the opportunity to accelerate the current momentum and cutting-edge innovation of both our smart devices and mobile phone products.”

The majority of the purchase price is for the acquisition of Nokia’s mobile devices and services with just under a third of the money covering licensing of Nokia’s patents and mapping services. The goal in bringing their biggest hardware partner in-house according to Microsoft is to triple its market share by 2018 and take a stronger position against the Android and iOS juggernauts.

What’s more interesting is that Microsoft’s current CEO, Steve Ballmer, is on his way out after announcing his retirement just last week. What does that mean? Elop is now a contender to become the CEO of Microsoft. In the meantime as part of the transition, Elop is handing off his Nokia President and CEO position to take the title of Nokia’s Executive Vice President of Devices & Services.

Nokia Lumia 920 Colors

That curious coincidence aside, the acquisition isn’t too surprising considering Nokia is Microsoft’s key hardware manufacturing partner and the Nokia Lumia phones – with their beasty built-in cameras – are serving as flagship Windows mobile devices. With Google acquiring Motorola last year, we wonder now how Nokia’s handsets and the competition may change going forward, especially when it comes to the implications of mobile gaming and second-screen functionality with the upcoming  Xbox One.

Follow Rob on Twitter @rob_keyes.

Sources: Daily TechTerry Myerson, Microsoft, AllThingsD