Unless you have been living under a rock, you will undoubtedly have heard that Microsoft and Nokia has signed a multi-billion dollar deal which will see Microsoft acquire Nokia’s mobile divisions as well as license the company’s vast amount of patents. The deal has shaken up the mobile industry and sent Nokia’s share price sky high, while seeing Microsoft’s stock market performance see quite a drop.
Microsoft and Nokia today announced that Microsoft will be acquiring Nokia’s long-struggling mobile division for just over $5 billion with an additional $2,17 billion being spent on licensing Nokia’s remaining patents. Microsoft will absorb the company’s mobile division as its own, taking with it 32,000 employees, 8,500 patents and of course both Lumia and Asha divisions. Additionally, Microsoft will also gain Nokia’s world class photography team.
The deal is expected to close in early January, if successful and approved by both shareholders and the necessary government regulators. Nokia’s CEO, Stephen Elop, will return to Microsoft and gain the Executive Vice President of Devices and Studios moniker, with many believing that he is currently the frontrunner to succeed Microsoft’s retiring CEO, Steve Ballmer.
Nokia, once a global leader in the mobile market, has seen a tremendous drop over the last few years and banked on Windows Phone to be its knight in shining armour, which thus far has failed spectacularly. Nokia will remain as a company, with its ownership of Nokia Siemens Networks and its expanding market leading navigation efforts in the form of NAVTEQ remaining as its largest assets, except for those vast amount of patents of course. The Nokia name will not be on any of Microsoft’s future devices and Redmond is allowed to manufacture Nokia feature phones for the next ten years.
Nokia will be able to create Nokia branded mobile devices from the beginning of 2016 if they wish, so don’t count an acquisition of Jolla or any other manufacturer out just yet. The company has been granted the possibility of almost $2 billion in cash loans from Redmond whether or not the acquisition goes through, giving the Finns some financial stability during the transition period.
Once the acquisition goes through, Microsoft is expected to earn as much as four times more from each Windows Phone device sold. Nokia currently holds over 80% of the Windows Phone smartphone marketshare. It remains unclear as to exactly what Microsoft has planned for Nokia’s feature phone division once the acquisition goes through, but don’t count your chickens on the Asha range surviving the nasty divorce.
Many believe that Stephen Elop was a trojan horse planted by Microsoft in order for Redmond to acquire the company, others claim that the acquisition came to fruition after Nokia allegedly wanted to drop Windows Phone, all we know is that Microsoft claims talks started in February of this year with over 50 board meetings happening before the deal was cleared by the companies’ respective boards.
In all likelihood, we will never see a Nokia branded mobile device ever again, but there is that slight chance that the acquisition is stopped by government regulators. Either way; Goodbye Nokia, you will be missed.