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Microsoft Buys Nokia’s Devices and Services, Stephen Elop Returning to Microsoft

On Tuesday Microsoft announced it is acquiring the Nokia Devices and Services unit. Microsoft is purchasing that unit for $5 Billion and is spending an additional $2.2 Billion to license all of Nokia’s patents. This is a bold step considering Steve Ballmer announced he is leaving the company within the next 12 months. Nokia President Stephen Elop will be returning to Microsoft, which leads many to already speculate he might become the next Microsoft CEO.

Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer announced their intent to jointly create market-leading mobile products and services designed to offer consumers, operators and developers unrivalled choice and opportunity at a press conference in London, UK February 11, 2011.  As each company would focus on its core competencies, the partnership would create the opportunity for rapid time to market execution.  The ability to bring together key products, such as Nokia Maps, Office, Bing, Windows Live, and Xbox Live would also ensure immediate consumer engagement.   Additionally, Nokia and Microsoft plan to work together to integrate key assets to create completely new service offerings, while at the same time  extending those established products  and services to new markets.

Microsoft Buys Nokia Announcement

From the Microsoft Press Announcement:

REDMOND, Washington and ESPOO, Finland – Sept. 3, 2013 – Microsoft Corporation and Nokia Corporation today announced that the Boards of Directors for both companies have decided to enter into a transaction whereby Microsoft will purchase substantially all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.

Building on the partnership with Nokia announced in February 2011 and the increasing success of Nokia’s Lumia smartphones, Microsoft aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing. For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.

Steve Ballmer also sent an email to all Microsoft Employees on the Nokia Deal:

“We announced some exciting news today: We have entered into an agreement to purchase Nokia’s Devices & Services business, which includes their smartphone and mobile phone businesses, their award-winning design team, manufacturing and assembly facilities around the world, and teams devoted to operations, sales, marketing and support.”

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In the email to employees Ballmer actually some general questions most people will have about the deal and how it will affect the company. Here’s a couple of interesting statements Ballmer made:

    • 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.
    • 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.
    • 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.

What do you think of the news? Brilliant step by Microsoft? Does this mean Microsoft will continue to enhance its development of Windows Phone, a possible “Surface Phone” in the future? Elop the next MS CEO? More tablets?

A lot of questions for sure, and this story will definitely be fun for us to follow. Let us know your take in the comments below!

Upadate: Steve Ballmer appeared on CNBC this morning to discuss the deal. Here’s the video of the five minute interview:

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4 Responses to Microsoft Buys Nokia’s Devices and Services, Stephen Elop Returning to Microsoft

  1. Brian Burgess September 2, 2013 at 11:32 pm #

    Big news! Lots of questions to be answered. Hopefully things get sorted out tonight and in to the morning and MSFT and Nokia have a joint press conference or something so we can grasp it all. I mean, Ballmer announces he is leaving in 12 months after a huge upper management reorganization, now this.

    A lot of people will be jumping onboard the Elop will be CEO bandwagon, but that remains to be seen. Wow, so many possibilities, questions…etc.

    What I do know for sure is Nokia is the flagship Windows Phone — currently the Lumia 1020 and earlier versions were great too. I need to get one to complete my full Microsoft ecosystem. It’s the only missing piece!

  2. Steve Krause September 2, 2013 at 11:34 pm #

    Apparently Nokia is getting into the Patent business. Microsoft is walking away with the mobile phone business and production facilities and employees (32,000 employees) however NOKIA is hanging onto the Brand and all the patents giving Microsoft just a 10 year deal on the patents.

    Wow, huge news for sure.

    • Bogdan Bele September 3, 2013 at 12:00 pm #

      Microsoft can’t lose here, since it’s getting Nokia’s patents and you can never have enough of those in the current market. But I can only say that I’m sorry for something that meant as much as Nokia’s Devices and Services unit sold for as little as that. Well, times change.
      But even with this deal, I don’t think Windows Phone will become much more of a competitor for Android.

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