Nadella and Elop
April 26, 2014

Microsoft Finalizes Acquisition Of Nokia, New Division Now Called Microsoft Mobile

redOrbit Staff & Wire Reports - Your Universe Online

Approximately seven months after first announcing it was planning to acquire one-time mobile heavyweight Nokia, Microsoft announced on Friday that it had sealed the deal, acquiring the Finnish firm for a reported $7.2 billion to $7.5 billion dollars.

According to Hayley Tsukayama of the Washington Post, the Redmond, Washington-based company’s bid to purchase Nokia’s devices business has “made it through all of the regulatory hurdles” and is now official. The new division has since been rechristened Microsoft Mobile.

“The opportunity for Microsoft to be both a devices and services company, so that it can deliver the complete proposition to its consumers, is at the heart of this,” said former Nokia CEO Stephen Elop, who will head up the new devices group. “Nokia certainly has a tremendous depth of experience in the design, the manufacturing and delivery of devices. Nokia over the years has literally delivered billions of devices.”

With the transaction complete, Microsoft has now seized control of Nokia’s mobile phone and smartphone businesses, as well as its design team, the majority of its manufacturing and assembly-related operations, and its sales and marketing support network. Furthermore, the deal will provide new supply chains, distribution, and other essential capabilities to help bolster the US company’s Windows Phone line of products.

In the wake of the Nokia acquisition, Microsoft becomes the second-largest maker of mobile devices with a market share of approximately 14 percent, said Bloomberg Businessweek’s Joshua Brustein. He added that the Windows mobile operating system is expected to experience the most growth in the industry over the next four years – though that is partially due to “its low starting point.”

“When the deal was announced, it seemed as if it might scuttle Microsoft’s strategy of having other phone manufacturers make devices that run its operating system. But it is not giving up that idea,” Brustein continued, noting that one reason the company has struggled in the mobile market is that it “wanted device manufacturers running Windows to pay Microsoft.” However, “the company recently said it would stop charging licensing fees to manufacturers of devices with screens smaller than 9 inches” – a model similar to Google’s Android OS.

Friday’s transaction comes on the heels of what CNET News executive editor Charles Cooper called a strong financial quarter for Microsoft, who reported earnings of $6.97 billion on revenue of $20.4 billion. That breaks down to 68 cents profit per share – exceeding Wall Street expectations of $20.39 billion in revenue and a per-share profit of 63 cents.

Elop also said he believes that Windows Phone could help Microsoft establish a foothold in emerging nations where it does not currently have much of a presence, due to the lack of personal computer ownership.

“Through the mobile phone business we have an opportunity to introduce what we like to call the next billion people, the next billion people to connect to the Internet, to Microsoft, because they'll have an opportunity perhaps to have a first Skype experience, or a first experience with Bing, as an example,” Elop explained in the company's announcement. “And so there are literally billions of people who can be exposed to Microsoft for the very first time.”

“The real value from this integration is bringing two globally sized capabilities in organizations together under one roof, really intimately and much more efficiently,” added Microsoft corporate vice president Tom Gibbons. “Customers should see a bunch of great end-to-end experiences that really empower them to have very enjoyable, very comprehensive solutions to things that they want to get done.”