Microsoft to buy Nokia for about $7.1 billion

 

Microsoft will be buying Nokia's devices and services business

Microsoft said it will be spending about $7.1 billion to buy Nokia's devices and services business. 

The major move is expected to close in the first quarter of 2014. Nokia will remain as a standalone company and it will focus on network infrastructure, and "advanced technologies." Microsoft will be getting all of Nokia's phone brands including the Windows Phone-powered Lumia lineup and the lower-end Asha devices. 

"It's a bold step into the future – a win-win for employees, shareholders and consumers of both companies. 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," said Steve Ballmer, Microsoft chief executive officer, in a prepared statement.

 

 The move will bolster Microsoft's "devices and services" strategy and it gives the software company the ability to provide its own hardware that is vertically integrated. If the deal closes, Microsoft will be able to control the hardware and software on some smartphones and this would be similar to what Apple does with its iPhone lineup.

Microsoft buying Nokia also gives the software giant access to a wealth of mobile patents. Nokia was once the king of the mobile space but its inability to quickly adjust to the iPhone led to this moment. To put it into perspective, Microsoft is buying Nokia for less than what it paid for Skype ($7.1 billion vs. $8 billion). In fact, this purchase price is less than what Nokia paid for NAVTEQ six years ago.

Interestingly enough, Nokia CEO Stephen Elop will be heading back to Microsoft to become the Nokia Executive VP of devices and services. Elop had left Microsoft to run Nokia and there were many charges that he was a "Trojan Horse" to eventually get Microsoft to buy Nokia. Elop is also now widely considered to be the front-runner to take over the Microsoft CEO spot that will soon be abandoned by a retiring Steve Ballmer.