In Blockbuster Deal, Microsoft to Buy Nokia

In Blockbuster Deal, Microsoft to Buy Nokia

Nokia is Finnish(ed)

In a deal valued at over $7 billion, Microsoft will purchase Nokia's Devices & Services business, license Nokia's patents, and license and use Nokia's mapping services. But given the recent turmoil in Microsoft's boardroom, the most interesting part of this transaction is the return of Stephen Elop: The former Nokia CEO will become Nokia Executive Vice President of Devices & Services at Microsoft.

"Building on our successful partnership, we can now bring together the best of Microsoft's software engineering with the best of Nokia's product engineering, award-winning design, and global sales, marketing, and manufacturing," Mr. Elop said in a prepared statement. "With this combination of talented people, we have the opportunity to accelerate the current momentum and cutting-edge innovation of both our smart devices and mobile phone products."

"It's a win-win for employees, shareholders, and consumers of both companies," outgoing Microsoft CEO Steve Ballmer added. "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 follows a broad partnership that was announced in February 2011 after Mr. Elop, who formerly led Microsoft's Office business, assumed the CEO role at Nokia and then decided to back Windows Phone. Microsoft and Nokia had discussed a purchase in the past and almost came to an agreement earlier this summer before talks broke down. But perhaps the drama of Mr. Ballmer's pending exit eliminated some concerns.

For Nokia, the sale of its most important business will bring a key influx of cash after years of losses and will result in a much smaller company. Nokia Chairman Risto Siilasmaa will become Nokia's interim CEO and noted that the firm would continue making mobile phone products, as well as networking, mapping & location, and other mobile products and services.

Although it's currently unclear exactly how this will all break down, here are a few details of the transaction. Nokia will transfer its Lumia and Asha brands to Microsoft but will retain usage of the Nokia mark. So future Lumia (and Asha) phones will be Microsoft products, not Nokia products. Microsoft says it will continue to license Windows Phone OS to partners like HTC, Huawei, and Samsung. One-time CEO wannabe Julie Larson-Green will temporarily continue running the Devices & Services team but will later join Mr. Elop as part of his team; that looks like a big demotion. Terry Myerson will continue to run Microsoft's operating system team. The Nokia teams will "stay largely in place, geographically," Microsoft says. But the firms will work to integrate the various services that both companies offer into a more cohesive offering.

This is an evolving story: More soon.

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