Microsoft will buy Nokia’s Devices & Services business for $7.17 billion (5.44 billion euros) in cash. Nokia is the second largest phone maker in the world.
The deal includes license Nokia’s patents, and license and use Nokia’s mapping services.
The decision to buy Nokia will create tough competition to both Samsung and Apple. It will also be a boost to Microsoft’s Slate tablets.
In Q4 2012, Nokia’s Devices & Services division sold 15.9 million units of smartphone. This includes 9.3 million Asha touch smartphones in Mobile Phones; 4.4 million Lumia smartphones in Smart Devices and 2.2 million Symbian smartphones in Smart Devices.
With this development Stephen Elop, who joined Nokia from Microsoft, will go back to the software major.
This also increases speculation that Stephen Elop could replace Steve Ballmer as the next CEO of Microsoft when he steps down from Microsoft within the next 12 months.
As part of the deal between Microsoft and Nokia, Elop will become Nokia Executive Vice President of Devices & Services.
Microsoft as part of its new strategy is aiming to focus on devices and software solutions that connect with both consumers and enterprises. Recently, Microsoft CEO Steve Ballmer announced that he would step down before seeing the result of the new strategy.
Recently, Gartner said Samsung leads the mobile phone market with 24.7 percent in Q2 2013 against Nokia market share of 14 percent.
Samsung increased its phone market share to 24.7 percent from 21.5 percent. Its main rival Nokia’s market share dipped to 14 percent from 19.9 percent. ( Top 10 mobile phone market share list for Q2 2013 from Gartner )
Microsoft will pay EUR 3.79 billion to buy Nokia’s devices & services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash.
At present, BlackBerry is also looking for a buyer.
Microsoft will draw upon its overseas cash resources to fund the transaction.
Nokia’s Lumia smartphones use Microsoft OS.
“In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution,” said Microsoft CEO Steve Ballmer.
Baburajan K
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