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Microsoft to purchase Nokia’s Devices & Services division for $7.2 billion, CEO Stephen Elop stepping down [Updated]

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Microsoft has announced the acquisition of Nokia’s Devices & Services division, the very portion of the Finnish OEM that designs and manufacturers its Lumia and Asha smart devices.

In a joint open letter from CEOs Ballmer and Elop, the companies are marking their “next chapter” together, “focus[ing] on enabling mobility through its leadership in networking, mapping & location, and advanced technologies.”

The partnership between the two companies, which began in early 2011 with the launch of the Lumia 800 and its subsequent series of Windows Phone-based devices, has grown increasingly symbiotic, with Nokia adding essential ingredients to Microsoft’s beleaguered OS, along with mapping data from the Finnish company’s NAVTEQ division. Nokia in term has received an enormous marketing partner in Microsoft, with outgoing CEO Stephen Ballmer joining Nokia reps on stage during a number of product launches.

Throughout Windows Phone’s assent and subsequent plateau, Nokia has been the only OEM to show consistent interest in the operating system; despite HTC and Samsung’s tepid acknowledgement of the software they continue to almost exclusively focus on Android. Nokia has made Windows Phone what it is today, for better or worse.

According to the two companies, Microsoft will purchase Nokia’s Devices & Services business for around $4.88 billion USD, with a 10-year lease for Nokia’s patents and intellectual properties for $2.18 billion, with a total cost of $7.2b. The deal is expected to close  in early 2014. This includes the Lumia brand and products, along with the company’s thousands of patents and licensing agreements with Qualcomm and others. Microsoft will be taking Nokia’s Mobile Phone business, too, which includes its successful low-cost Asha line (which, ironically, does not run Windows Phone).

Nokia will continue to own its branding, but Microsoft will leverage the name as it attempts to grow the smartphone line around the world. As part of the deal, Microsoft will also license Nokia’s HERE platform exclusively for four years. Since Nokia, even without its Devices & Services division, is quite a large company, having just bought out Siemens’ share of its Nokia Solutions and Networks division last month, it will be interesting to see how the now-separate NSN will work with Microsoft on future projects.

Top Nokia execs, including CEO Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber will transfer to Microsoft as employees. Stephen Elop, however, will be stepping down as Nokia’s CEO to become Executive Vice President of Devices & Services; in his place, Risto Siilasmaa, former CEO of F-Secure Corporation and current Nokia Chairman, will be stepping in as interim CEO.

Update: It appears that Stephen Elop is in contention for Microsoft’s upcoming CEO vacancy. The erstwhile Nokia CEO and soon-to-be EVP of D&S has been confirmed by outgoing Microsoft CEO Stephen Ballmer as a candidate — formerly external, now internal — but neither party would reveal his place in the standings.

The deal also breaks down as follows: Nokia’s Devices & Services division, along with a four-year exclusive parternship with HERE Maps (which Nokia retains), all of Nokia’s phone brands, including Lumia and Asha, its employees, marketing materials, sales force, manufacturing facilities and trade partnerships; and a 10-year non-exclusive lease of Nokia’s patents and IP.

  • JB

    So count the days till Sony Partners with Blackberry 10. Which I think would be smart on Sonys part.

    • wes

      I think there will be a lot of companies that will be trying to get blackberry 10. Lg has webos. Samsung has tizen. There’s Firefox that’s up for grabs. Com’on competition!!!!

    • EvanKrosney

      I can guarantee you that LG isn’t going to do anything with webOS. At best it’ll end up as a smart TV OS.

    • wes

      I highly doubt LG will make anything of their webOS, but at least they can if push comes to shove.

    • kroms

      Not gonna happen. Sony will not buy BB.

    • Graham Fluet

      I think Lenovo would be a better choice

  • silver_arrow

    Microsoft already owned Nokia in everything but name.

    Hopefully this will bring Windows Phones market share i love my 8X but it has a lot of catching up to my Nexus 4,.

    I just fear that now neither HTC nor Samsung will feel motivated to make Windows Phones.

    • Anonymouse

      They didnt before… so where’s the fear?

  • MapleHoney

    Good move but is it too late? The OS really needs more apps to save the day.

    • beyond

      apps are easy to take care of, what they also need is to catch up on OS design and features that people have been asking for (like notifications hub)

    • Xyrax

      The OS definitely needs updates, but apps are not easy to take care of at all. They have been trying for like 3+ years. If it was easy, it would have been done by now.

    • Anonymouse

      Its quite easy but! costs money and companies think twice if the marketshare isnt that high… thats why only few ones port or exclusively built SW for them

    • Cormang

      What apps are missing?

    • Alex

      No it doesn’t. It needs a small number of quality apps. It’s pretty much there except for a couple of missing ones.

  • beyond

    I’m not sure how I feel about this. I want Windows Phone to succeed but Nokia has a lot of experience in the design and manufacture of phones and I hope Microsoft doesn’t screw up a good thing.

  • deltatux

    So this was Microsoft’s plan all this time, get their former executive to “infiltrate” Nokia, and then allow them to buy out Nokia’s handset/services division? I still can’t see Microsoft being a vertically integrated company like Apple.

    What does this mean for Nokia HERE? Does this mean Microsoft also own NavTEQ in this deal?

    • Sukdis Knaatz

      Someone called this a couple of years ago, and I remember thinking that this very well may be the case. And sure enough this is exactly what happened.

      Elop was a plant.

    • Stuntman06

      I thought everyone was calling this year’s ago. This was so not shocking to me. I’m just sad that my dream of owning a Nokia Android phone is now officially over. I didn’t think it would realistically happen anyway.

    • jattsober

      I called him a mole the day he abandoned Symbian and Meego, and then sent out the burning platform memo.
      I hope MSFT doesn’t dig Nokia’s grave besides SURFACE, ZUNE, & KIN phones.

  • Rich

    Makes sense, especially since they were basically paying Nokia billions just to stick with WP, lol.

  • thedosbox

    Sad to see Nokia lose it’s independence as a mobile phone company, but this shouldn’t be any surprise given their recent trajectory.

    I should bust out the old E71 for a final memorial call.

  • evondegus

    Elop can finally acknowledge his title, “trojan horse”.

    • beyond

      I wonder if he used Trojan brand when he screwed Nokia

    • Cormang

      Yeah, he took a portion of company that was loosing millions a quarter and sold it to a company with massive profits. Now Nokia is officially a profitable company. Who got screwed exactly? I guess you could say some jobs will be migrated or axed. But in the end thousands of jobs are saved. So I’m having a difficult time understanding where the problem is…

  • IJustGotaTan

    RIP Nokia.

    • IJustGotaTan

      If you say that enough times, you might eventually think it’s true.
      RIP Nokia

  • DADSGN

    This is great news for both companies! Was needed to fight the evil empire google

    • kroms

      LMAO. uh ya sure.

      Evil empire, lol you sound like Steve Jobs.

    • Robu

      Pretty sure google’s been the only one caught with a browser that actively spy’s on you, not to mention google glass…

  • Sanjay Kumar

    A month ago Nokia was blaming Microsoft for their failures since Microsoft wasn’t working enough to get customer satisfied with I and os and lack of app selections.
    Now Nokia is going to be part of Microsoft.

    • kroms

      I know right ? Crazy but this was the master plan all along.

  • wes

    Freaking freakers!!!!

    Will see how this will work out. Google with Motorola, Apple with Apple, Microsoft with Nokia. These three companies could close down all other android OEMS, because they don’t have their own OSes. But they will probably keep the status quo, because that way they will all make more money. That is, until one of them starts to lose market share. I hope that Microsoft get aggressive and drive down smartphone prices.

  • kroms

    Win8 sucks. IMOH ,but hey, if you like it then this is right up your Alley.
    MS will eventually screw up Nokia, it will take time but Nokia as a Quality phone maker is gone. I’d ne interested to hear how the Owners ( Stock Holders ) feel about this.
    1. Get Stephen Elop to head Nokia

    2 Make the stock drop.
    3. Buy them out .

    Si la vi.

    • Robu

      How exactly does one of the most fluid phone OS’s suck exactly? Is it the unified Kernel for Wp8 ? I’m curious to hear why exactly

    • kroms

      Well , let me be frank and honest with you. I do not like it all. Not one bit.
      Reminds me of VISTA. Now having said that , it is only MY OPINION.
      Yours is that it is ” one of the most fluid Os’s for Mobile phones ” that is your opinion and I respect that. But for me and many other’s it WP8 is terrible. Now Windows 7 is by far the best OS MS has ever released but that of course is for the Desktop PC and not Mobile Phones.
      Win8 for a desktop is terrible, For a Tablet it is not the greatest but just ok. For the Phones, it has a long way to go to be IO’s Android and even BB10 is better.

    • K_p0w3r

      Id Have to disagree with windows 7 being ” the best os ms has ever released.” It’s was pretty much Vista Service Pack 3. while it was more refined it was still a system hog. if only we could get a windows 7 type experience with the performance of windows 8

    • Samuel Gomez Recuero

      the actual term for your last line is: C’est la vie=thats life. Just saying

  • Humberto Giambrone

    Was really hoping to own a Nokia Android phone at some point. Oh well. Good luck to them.

    • Robu

      Why? The world does not need another OEM making a device with that laggy OS

    • Garrus Vakarian

      Wow, can you make your love of Microsoft any more obvious.

    • Robu

      Fun fact, I own an S4 even rooted it’s slow and clunky. AND it’s not an uncommon issue with Android handsets. I’ve had BB10, iOS, Android 4.2.2, Windows Phone 7.8, WP8 devices. So far the only two that are smooth are iOS and Windows Phone and the windows phone didn’t need the mini-computer the S4 has to deliver that performance.. It has nothing to do with “love of Microsoft” it has to do with common knowledge, experience and not having my head shoved so far up googles’ a*s I can see a better product (that includes iOS being better than Android)

    • IJustGotaTan

      It’s a common fact that the S3 and S4 are full of bloatware. Unfortunately they are the hottest selling Android phones and it’s what most people see. There are plenty of Android alternatives in both hardware and software that do not show the same ‘laggyness’. The Moto x is not the latest in h/w specs yet it performs quite nicely. the HTC One is also supper smooth.

    • kroms

      He has no idea what he is talking about. People like him are the same people that everything else unless it is what they like or use, then it’s the best. The Nexus 4 is by far the best smartphone out there hands down for the money and yet , people are obsessed and blind by gimmicks and loyalty.

    • Alex

      Nexus 4 is nice but has suspect battery life.

      Wife has one and it’ll sometimes lose network connection while my phone (a WP8 device on the same network) sitting next to her is working perfectly.

    • dinmab

      i wonder why android and ios are beating the crap out of WP8 ? maybe cos majority of ppl r looking for something more ? u kno like an OS with features that makes it an actual smartphone ?

    • kroms

      :) LMAO.
      Common knowledge………….. lol
      Robu , the problem is people like you that do not know wtf they are talking about. Educate your self first on Android and then come back so we can have a discussion.
      Here , I will you get started.

      ” My PC is slow and clunky, its sooooo slow ” Windows is crap. ”
      Dude, did you ever stop and think for a moment there are reasons for an Issue to occur and why they occur ?
      lol typical everyday user.

    • K_p0w3r

      Fact: Opinion does not always equal Common Knowledge

  • wildspin

    This has to be tech industry’s biggest scandal of all time.

    • kroms

      Agreed. It’s amazing how well this worked out for MS.

  • TallePeja

    Microsoft is going to kill my beloved Nokia… I like Nokia+Wp8 partnership, but I want Nokia to be independent
    p.s. Lumia1020 is probably the last Nokia phone I’m going to own

    • TallePeja

      Nokia(Europe)=Quality comes first
      Microsoft(North America)= $$$ comes first

  • Sweet

    Not surprising.

  • LeafsFanGirl

    IMO, Nokia made a BIG mistake by choosing Windows as their main OS. If they chose Android, I think they would still be #1 or #2. I was a big Nokia fan back in the Symbian days. I tried a few Nokia WP devices but don’t like the OS. Nokia got too cocky and said they will destroy Android. Well, it looks like it’s the other way around.

    • hyperhyper

      Yeah Nokia hardware with Android would be sweet though HTC has done pretty well in that department. I was rooting for Nokia too.

  • Toron James

    Its funny how many people are calling Elop a Trojan horse, Nokia is growing its marketshare, Elop is a genius, this deal only locked Nokia and Microsoft as one now they were already working for the last couple years together. Love my Lumia 920, im looking forward to the future, to each their own.

    • kroms

      Well the thing is Nokia will be assimilated into MS and cease to exist in a FEW years as MS wants WINDOWS PHONE ! to be the new thing going forward and not Nokia. Give a few years and you will see. Shortly though the first thing that will happen is more Nokia people will lose there jobs as MS reorganizes it’s self.

      Also Nokia Dropped big time market share ! and continued to drop while partnered to MS. Shareholders lost allot of money.

    • Rob Schoenfeld

      Wow Toron.. What an unbiased comment. Your right this will move Microsoft and Nokia ahead. Not to mention give all the profits to Microsoft. MS will earn 4 times the amount on each Nokia WP device sold. Plus phasing out the Asha line and replacing them with cheap WP devices will have a huge penetration opportunity in emerging market..

      Good comment. I knew you could do it..

  • selonmoi

    Let the shareholder lawsuits begin.

  • Big Ang

    The best part about this news is that it will hopefully shut up all those i****s who have been asking for a Nokia phone running Android!

    Seriously, how is making Android phones working out for HTC, LG, Motorola, and Sony? Unless your name is Samsung OR you are a low-cost Chinese manufacturer, you’re not making money with Android. Samsung dominates the top, middle, and some of the low-end, with Huawei and other Chinese manufacturers owning the rest of the low-end.

    • Xyrax

      Ironically every company you listed there is in the black in their smartphone divisions making Android phones…. The only one in the red right now is Motorola…..

      Meanwhile, Nokia is in the red…. Now re-read your post and see how stupid you look.

    • Garrus Vakarian

      Nah, Big Ang just hates Android and wants all of us to lock into Microsoft if we want the great Nokia hardware thats all. His first sentence says it all.

    • Robu

      It won’t sadly, and of course most people will go on how it’s going to kill Nokia when in fact Microsoft helped bring it back from the dead with WP. The purchase will only allow for tighter integration between product sweets and much higher control (much akin to iOS devices). Personally I’m happy Nokia picked a path and stuck to it, they grew market share faster than most platforms in an already saturated market which despite what some may think is quite the accomplishment

    • kroms

      Nokia never picked a path…..Elop the trojan did that for them, lowered the stock as much as possible and when they would not go any lower + a HUGE pressure from Nokia board an stock holders Nokia was ready for the picking. Funny how now Elop is a contender for the CEO of MS huh?
      WoW , what an amazing coincidence ?

    • Me Ted

      Nah and Roma sucks.

    • dinmab

      i think all of em except moto are making profits.

    • kroms

      The only players not in making it were BB and Nokia, Nokia was somewhat breaking even , but even then they were not moving enough phones.
      And Yes, had Nokia gone Android they would have been MUCH more successful just because of there brand name on Android then they have been on Windows.

  • mrdeeds72

    Microsoft purchases Nokia. Best news this month. Long live Windows Phone!

  • Mischa Price

    i hope they are still nokia branded because they made good NOT smart phones like their asha line for developing markets.

  • Thomas Ramsay

    Nokia A Division Of Microsoft

  • Striker67

    Sounds shifty to me. Sale of the business brings Elop back to MS. Makes u wonder if that wasn’t the plan all along!!!

  • hyperhyper

    Was Elop the trojan horse people suspected of him being (going to Nokia to sabotage it so MS can pick it up on the cheap?) I don’t think so but I do think he would make a good CEO as he is likable and that is a big step over Ballmer (who reminds me of a schoolyard bully). Wish the international version of the 1020 was available for us already (so we could use it on Wind).

    • J-Ro

      I think he was a trojan house. Nokia would have done fine if they had Android as well as WP. Now not only is Microsoft getting them for cheap but they don’t have to do much R&D because Nokia already did most of it.

      Corporate jackals

  • canuck07

    Are you kidding me? MS bought Skype for $8.5 billion while Nokia’s just $7.2 billion?

    • kroms

      LOL I know !! Right ? LOL

      Man, what a steal !!

    • Mike366

      Skype generates profits and Nokia phone business has been losing money for years. $7.2B is already too much. This is why MS stock prices slumped after the announcement.

  • LarsFromMars

    Wow. Elop did more damage to Finland than Hitler. How is he not in jail yet?

  • kroms

    Update: It appears that Stephen Elop is in contention for Microsoft’s upcoming CEO vacancy.

    That’s all you have to know ……right there ! Business 101

  • Alex

    Except he’s taken an entirely different job at Microsoft.

    Turner will be CEO

  • PT

    This doorknob CEOs should get a big fat bonus for screwing Nokia to the grave.
    Nokia and Rim should have turn theirs OS to android from the beginning. It’s to late now.
    Such a pity to see two great company making solid hardwares going to straight to grave.

  • K_p0w3r

    Well Nokia sealed its fate when it first partnered with microsoft in the first place. almost every company that partners with microsoft usually either goes belly up or gets bought up by microsoft

  • WC

    Good luck, MS has a long steep hill to climb.

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