Report: Microsoft in recent talks to buy Nokia device business

Ever since Nokia announced in February 2011 that it planned to adopt Windows Phone as its exclusive smartphone platform, the company has enjoyed a 'special relationship' with Microsoft that goes beyond the partnerships enjoyed by other Windows Phone manufacturers. At the London launch of the Lumia 925, Nokia's Kevin Shields told us that Nokia and Microsoft engineers and developers exchange daily calls, while executives from both companies meet on a quarterly basis to discuss the platform. 

Microsoft's smartphone strategy relies heavily on its Finnish partner, as Nokia is by far the largest manufacturer of Windows Phones. But that strategy has been floundering, with the platform holding on to just 3.2% of global smartphone market share, beating BlackBerry into fourth place, but still lagging far behind its iOS and Android rivals. 

Meanwhile, Microsoft is in the process of repositioning itself as a "devices and services company", with its Surface tablets marking its first foray into building its own PC hardware. There's been much speculation that Microsoft would add to these devices with a 'Surface Phone', though the company has dismissed these rumours, pivoting attention instead to its OEM partners. Curiously, Nokia CEO Stephen Elop said in October that he would welcome the launch of Microsoft-branded handsets.


Nokia hardware and Microsoft's OS are a great match - 
but a marriage between the two companies looks like it's off the table

While Microsoft denies any interest in building a smartphone under its own brand, The Wall Street Journal reports that the company has been seeking to secure the future of its smartphone platform by acquiring Nokia's device business, bringing its largest Windows Phone partner under its own roof. 

According to the Journal, the two companies have recently been engaged in "advanced discussions" to negotiate the terms of Microsoft's acquisition of Nokia's handset business, with "significant progress made on a plan" to integrate the two. The negotiations were reportedly held in London, and were sufficiently advanced that an oral agreement in principle was apparently imminent.

However, according to an unnamed source, the talks have since failed, and "aren't likely to be revived", in part due to a failure to agree a satisfactory price for the sale. Microsoft wouldn't comment on the report, but a Nokia spokesperson said that the company has a "deep partnership with Microsoft and it is not uncommon for Nokia and Microsoft to meet on a regular basis."

Source: The Wall Street Journal

Editor's note: This article was updated after publishing to include information about comments from the two companies.

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Hmm, I think this would be a good investment for Microsoft to make. As someone else alluded to it would be cheaper for them to produce handsets and sell at a lower cost, ensuring that everyone can afford a Windows Phone 8 (and thus gaining more market share). Got to invest to profit.

Spicoli said,
Multiple rumor stories about someone buying Nokia. Someone doing a stock pump?

Possible.... as well as it could be that Nokia is for sale......
Also there is the issue of Siemens looking to sell its shares of NSN: Nokia could decide to sell as well and get a cash injection but loosing its main source of cash flow, buy Siemens shares or find itself with a new partner. lot of things going on at the same time.

wotsit said,
Um - what is Nokia BUT a devices company?

Nokia Siemens? And Navteq? It's the devices division that is dragging them down...

If Huawei owned Nokia, I betcha they would probably apply their expertise on Huawei's own products instead of the other way around. Plus, they hinted that they would probably put an emphasis on Android too.

MeowPurr said,
Come on MS, drop a couple billions, it'll be worth it!

It would indeed. MS could sell their phones at a lower cost due to not having to pay w8 phone licences. Also they could mass produce them more and market them so they would likely gain a bigger market share if they released say 4 models at different price points.

MeowPurr said,
Come on MS, drop a couple billions, it'll be worth it!

One of the issues mentioned in the original article was that MS would have used part of its funds located abroad to do it and that would have had tax repercussions in the US.

I think that Nokia hardware is ahead of MS software. MS should do something about WP. I am fan of WP, own WP smartphone, but I see that WP as a OS, as a platform, is clearly behind iOS or Andorid.

This really is the problem. Nokia, even HTC cant really push the best phones or their best ideas with WP in the state it is, not to talk of all the missing features. That should be priority, if the OS was truly competivive and not full of holes like non working notifications, poor Xbox music, no Xbox video syncing, worldwide bing services that actually compete with google, it would probably sell a bit better.

I'm not sure if it's completely true, but I heard that at least in certain markets where Bing is very poor, Microsoft integrates the best non-Google search engines for those Windows Phone devices (like Russia with Yandex, and China with Baidu).

Ha, so basically this "story" says that Microsoft was going to buy them (which would turn the story into a prediction) but then backed out so nothing changes (of which now nothing about the story can be proven or disproven).

This is journalism?

Rann Xeroxx said,
Ha, so basically this "story" says that Microsoft was going to buy them (which would turn the story into a prediction) but then backed out so nothing changes (of which now nothing about the story can be proven or disproven).

This is journalism?

wall st journal has been responsible for a lot of news leaks about hardware companies that have been proven to be correct. This isn't just a "analyst" saying this like many other neowin articles.

M_Lyons10 said,
I'd much prefer Microsoft have a stake and allow Nokia to innovate, than buy them outright...

me too but i'd also like for nokia to make android phones too, that won't happen if microsoft owns a significant stake though.

Yeah, so when they buy Nokia which division (apart from Skype) will then ignore them and make software for ios and android instead? Good move, Microsoft needs to get the software up to snuff first and allow Nokia to really let the innovations flow. Could have been an EOS with quad cores, 1080p right now if not for MS sitting on their arses.

I ask this like I do all of the time...why do you need a 'phone' that has a quad core cpu in it? What could you possibly be doing on it that it requires a quad core? Does any flavor of any os actually require a quad core in order to run correctly?

I ask this as well and the answer is marketing. From tech sites to tech fans being able to use the latest hardware will be a plus point. The OS might not need it but it will allow Nokia to say they are on a level playing field with the market leader. And the OS needs updating with other features as well so that is also a benefit.

#Michael said,
I ask this like I do all of the time...why do you need a 'phone' that has a quad core cpu in it? What could you possibly be doing on it that it requires a quad core? Does any flavor of any os actually require a quad core in order to run correctly?

If an operating system is coded very well a quad core cpu can be upto 4x as fast as a single core cpu. WP8 seems to be coded well in this regard whereas android's performance doesn't increase that much with more cores, i think i read dual core is only 40% faster than single core on android.

#Michael said,
I ask this like I do all of the time...why do you need a 'phone' that has a quad core cpu in it? What could you possibly be doing on it that it requires a quad core? Does any flavor of any os actually require a quad core in order to run correctly?

I'm going to respond like a total win phone fan-boy "why are you so against progress you know more cores are the future if you don't want progress you can stay in one of the single core phones nobody is forcing you to buy it" /s

Perception. It doesn't matter what WP needs or doesn't, the software is cutting edge and at least one or two devices need to be bleeding edge even if theoretically the OS doesn't need them. The os might not need them but I do.

torrentthief said,

If an operating system is coded very well a quad core cpu can be upto 4x as fast as a single core cpu. WP8 seems to be coded well in this regard whereas android's performance doesn't increase that much with more cores, i think i read dual core is only 40% faster than single core on android.

No, it could not be up to four times as fast.

Amdahl's law:
Speed Increase = 1 / ((1 - P) + (P/N))
where P is the portion of the code that runs completely in parallel and N is the number of available execution units (cores). If you graph this, you'll see that it's asymptotic in nature.

#Michael said,
I ask this like I do all of the time...why do you need a 'phone' that has a quad core cpu in it? What could you possibly be doing on it that it requires a quad core? Does any flavor of any os actually require a quad core in order to run correctly?

well, devices don't NEED to be in black or in glass. They could be in some nasty beige plastic. they just sell well that way. the general public doesn't give two ****s if it NEEDS a quad-core atm, they just like having em.

so there, that's all there is to it D: