It’s Official! Microsoft Acquires Nokia’s Mobile Division

by Matt Klassen on September 4, 2013

In a move that has been two years in the making, Microsoft has officially acquired Nokia’s struggling mobile division. In May 2011, following the announcement that Microsoft and Nokia were partnering to create the next generation of Windows smartphones, rumours first emerged about this particular endgame scenario of such a relationship. While I was sceptical at the time (doubting the timing of the rumour more than the inevitability), the reality was that Microsoft was indeed kicking the tires of the fading mobile brand ahead of this paradigm altering acquisition.

According to the Wall Street Journal, the Redmond based PC giant has purchased Nokia’s mobile division for a cool $7 billion, a move that will instantly vault Microsoft into contention in the global cellphone space, allowing it to access Nokia’s worldwide market reach (its last true asset).

The news got even more shocking, however, as it was announced that as part of the deal Microsoft will bring on aboard 32,000 Nokia employees including none other than company CEO Stephen Elop, who is now believed to be among the short list of contenders for the top spot at Microsoft following Steve Ballmer’s recently announced departure.

While certainly no conspiracy theorist, I will admit that over the past two years my scepticism regarding the possibility of such an acquisition faded, replaced by a sense that Microsoft may have been subtly pulling the strings behind the scenes to make sure such a deal came to fruition. Not only has Nokia made several confusing missteps at the urging of Microsoft, but those missteps have led to decreased investor confidence and a growing irrelevance in the mobile market, lowering Nokia’s market value, putting it within Microsoft’s financial reach; in hindsight almost purposeful precursors to this fateful day.

In regards to the acquisition, the companies announced late Monday that Microsoft will pay €3.79 billion to purchase “substantially all” of Nokia’s business, which includes its smartphone division. The PC giant will further pay €1.65 billion to license Nokia’s patents (the last thing the company seems unwilling to part with), bringing the total cost of the deal to €5.44 billion, or $7.18 billion.

As mentioned, with Nokia already Microsoft’s closest partner in the smartphone market, and with the Finnish company seemingly unable to make a go of it in a market that has always befuddled it, this acquisition is clearly a recognition on Nokia’s part that things were not about (or lets just say, never) going to get better, and that it couldn’t catch market giants Apple and Samsung without some help.

In regards to the inclusion of Stephen Elop in the deal, I’ll admit this one is still a head-scratcher, as if Elop is really in contention for Microsoft’s top job it sure does seem that the Redmond company suffers from the same malady its new Finnish acquisition does, no sense of reality. While Elop has deep connections with Microsoft, a former high level employee with the company, there’s little to show for his three year tenure as head of Nokia, except the company’s continued spiral, a worsening of its smartphone irrelevance, and its stubborn refusal to change of course.

But that said, this is really the best case scenario for both Nokia and Microsoft, the former having no chance to regain its once dominant position in the mobile market, and the latter looking for an established global brand to help entrench its position as the market’s third smartphone choice.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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