News roundup: Microsoft purchases Nokia's mobile devices unit

Stephen Elop, Nokia's former CEO, may be a candidate for Microsoft CEO Steve Ballmer's replacement.

Microsoft agreed to purchase Nokia's devices and services division, best known for its smartphones, early Tuesday morning. The biggest impact of the deal involves Microsoft obtaining the Lumia and Asha brands and hardware, along with the Nokia teams responsible for them, though the deal has other ramifications.

The acquisition, expected to close in the first quarter of 2014, will also allow Stephen Elop, Nokia's CEO prior to the deal's announcement, as the head of Microsoft's devices division. Elop could become a primary candidate to replace current Microsoft CEO Steve Ballmer, who recently announced plans to retire within a year.

Microsoft to buy Nokia's devices and services division

  • Microsoft has agreed to purchase Nokia's devices and services division for about $7.17 billion, pending regulatory and shareholder approval. As part of the deal, about 32,000 Nokia employees will become Microsoft team members, including 4,700 in Nokia's Finnish offices.
  • The Lumia and Asha brands will be owned by Microsoft when the deal closes, though Microsoft will license the Nokia name to sell the latter devices. Lumia has been Nokia's Windows Phone brand since the company's first device using Microsoft's mobile operating system launched in February 2011.
  • Microsoft signed a 10-year license agreement to use Nokia's patents as part of the deal, and the company will also license Nokia's HERE mapping services for four years.

Stephen Elop returning to Microsoft as part of Nokia deal

  • Elop will return to Microsoft as part of the deal, the company where he once oversaw the development of the Office productivity software suite; he left Microsoft in 2010 to become Nokia's chief executive.
  • Until he returns, Elop will serve as an executive vice president at Nokia, in charge of the company's devices unit. Risto Siilasmaa, chairman of Nokia's board of directors, will serve as interim CEO until a replacement is found.
  • When the deal closes, Elop will be in charge of Microsoft's devices division, overseeing all of the company's devices and studios as well as the majority of the teams Microsoft acquires from Nokia as part of the deal.

What Microsoft's deal to acquire Nokia will mean to everyone

  • A strategic document released by Microsoft states the acquisition of Nokia's devices unit was made because the company "cannot risk having Google or Apple foreclose app innovation, integration, distribution or economics."
  • The document also states the HERE mapping services will serve as "an effective alternative" to Google's mapping services. The implication likely means devices from other OEMs will use the HERE services as part of the acquisition.
  • Microsoft will continue to release apps and services for Apple's iOS and Google's Android mobile operating systems, such as the recently released Office 365 apps.

What will be left of Nokia after Microsoft's deal closes?

  • Nokia will retain about 56,000 employees after the deal is finalized, and three businesses will remain, including Nokia Solutions and Networks, which was previously a joint venture between the company and Siemens.
  • The other two businesses remaining include the company's HERE mapping services and its advanced technologies unit; the latter business will continue to expand the company's patent holdings and work on new projects involving "connectivity, sensing and material technologies, as well as web and cloud technologies."

Microsoft OS leader: Buying Lumia "will help" other Windows Phone OEMs

  • Terry Myerson, the new head of both Windows and Windows Phone, says Microsoft's purchase of Nokia will benefit other OEMs who license the Windows Phone operating system. Microsoft will continue to license the operating system, even after the Nokia purchase is complete.
  • Myerson claims smartphone manufacturers will still be able to "deliver unique devices at a variety of price points," saying there's a wide range of options in terms of components that will help differentiate offerings from Nokia's devices.

Image via Microsoft

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