On Monday, 3rd September 2013, Microsoft and Nokia, two really huge names in the mobile industry announced that Microsoft will acquire Nokia's phone-making unit for about 7.2 billion US dollars in total — including patents — allowing Nokia to expand its presence and technologies in other markets.
The principle reason behind the deal is to secure the Windows Phone ecosystem, along with an accelerating phone market share for Microsoft. Nokia will retain its other technology units, including Nokia Solutions, Nokia Solutions and Networks, Nokia Here, its CTO office and its patent portfolio.
With so many facts and figures associated with this lengthy and complicated deal, we've picked out some key facts which you should know to better understand the deal.
- Julie Larson-Green, currently in charge of Microsoft's own devices and studios team will continue to working on the Xbox One and Surface devices. She will join Stephen Elop's team once the deal gets finalized.
- Stephen Elop, Chief Executive of Nokia who previously worked as an executive at Microsoft, will once again join Microsoft, heading up the phone making division that Microsoft has just bought.
- The deal is split between the phone making unit and Nokia's patents. Microsoft will be spending $5 billion USD on the phone-making unit, and 2.17 billion USD on licensing Nokia's patents.
- Nokia will retain its patent portfolio, but it will give Microsoft a 10-year license to its patents at the time of closing of the deal.
- Microsoft will make available to Nokia about 1.97 billion USD in financing in the form of three payments of 659 million USD from oversees resources.
- Nokia shareholders might vote on the deal in an extraordinary general meeting on November 19, 2013.
- 32,000 Nokia employees will be working for Microsoft, including 4,700 employees in Finland.
- Microsoft will build a data center in Finland that will serve the customers of both the companies in Europe. More than 750 million USD in capital will be spent on the new data center over the next few years.
The deal is expected to be closed by quarter of 2014, as it depends on an approval by Nokia shareholders and regulators. This acquisition is likely to upset the other companies that use Microsoft Windows Phone operating system on their handsets, notably HTC and to a lesser extent, Samsung as well. But there is little business there for Microsoft to lose. Nokia’s phone currently counts for over 80 percent of the Windows Phones sold.