Microsoft announced last night that it has acquired Nokia’s devices and services business, as well as a license to use its patents and mapping service. Microsoft will pay €3.79 billion (£3.21 billion) for Nokia’s devices arm, which covers phones in its Lumia and Asha range. In addition, the creator of Windows will pay €1.65 billion (£1.40 billion) to license Nokia’s patents, bringing the grand total to €5.44 billion (£4.61 billion) in cash.
Stephen Elop will also be stepping down as CEO of Nokia. Elop will now serve as the vice president of devices and services, so his touch will still be felt on the hardware side. Interestingly, Elop will also reportedly be considered as Microsoft’s next CEO once Steve Ballmer steps down in the next year.
“It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies,” said Ballmer. “Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services.”
The deal shouldn’t come as much of a surprise. Nokia and Microsoft have been extremely cosy ever since the Finnish smartphone manufacturer announced that it would focus exclusively on Windows Phone back in 2011. Microsoft injected “billions of dollars” into Nokia as a result, but Windows Phone has struggled to gain significant market share so far, sitting firmly in third place.
But if there’s one thing that Microsoft has a lot of, it’s cash. Nokia’s sale price is relatively cheap in the grand scheme of things – Skype, for example, was a more expensive acquisition – and having direct access to the hardware and software design process may help to produce some better products that will gain traction. Having said that, there’s no room for failure going forward. If Microsoft fails to deliver a mobile ecosystem that can stand up to iOS and Android in the near future, then it’s simply going to be left behind.