Microsoft Closes Nokia Acquisition
by Brett Howse on April 25, 2014 8:25 PM EST- Posted in
- Smartphones
- Microsoft
- Mobile
- Lumia
Back on September 3rd 2013, Microsoft announced its intentions to purchase Nokia's mobile phone business, and after several extra months of waiting for regulatory approval, that deal officially closes today.
Microsoft has acquired almost all of the Nokia devices and services segments, as well as an agreement to license patents from Nokia, and to license the HERE mapping technology.
Nokia’s devices and services will now be known as Microsoft Mobile Oy (Oy being a Finnish abbreviation of Osakeyhtiö which translates to Limited company ala Wikipedia) and for the time being, Microsoft Mobile Oy will be run as a subsidiary of Microsoft.
Though the final price was not officially announced yet, it is expected to be slightly higher than the $7.2 billion originally announced. As part of the deal, Microsoft now employs about 25,000 former Nokia employees, as well as owning most of Nokia’s manufacturing. Several of the plants did not transfer ownership due to various factors – the manufacturing facility in India which employs 7500 workers is subject to an asset freeze over ongoing taxation proceedings and therefore will still be owned by Nokia but a service agreement has been reached with Microsoft to allow them to keep the plant active. Also, one plant in Korea which employs about 200 people will close rather than transfer.
Former Nokia CEO Stephen Elop will now report to Satya Nadella as executive vice president of the Microsoft Devices Group – now expanded to include Lumia smartphones, Nokia mobile phones, and the recently forked AOSP versions of the Nokia X phones in addition to Xbox hardware, Surface, Perceptive Pixel products and accessories.
What this brings to Microsoft is quite a lot of experience in building not only mobile device hardware, but also software and imaging. It’s been clear to see the influence Nokia had on Windows Phone since they initially signed on as exclusive partners in 2011. Obviously the hope by Microsoft is that bringing this experience tighter into the organization will allow them to add features at a quicker pace.
Also the manufacturing component is something that Microsoft as a software company has never had direct control over, and it may help them in other areas with the move to a devices and services company last year. Surface 2, for example, has been in short supply and while it’s far too early for Microsoft to move production of their own products to the former Nokia manufacturing facilities, it is possible they can leverage that for future products.
Steve Ballmer announced that Microsoft was moving from being a traditional software company to a Devices and Services focus, and with this acquisition, they have fleshed out the devices side. Now they need to execute that strategy and try to kick start their mobile efforts which have struggled in the marketplace so far.
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SetiroN - Friday, April 25, 2014 - link
The whole reason WP started gaining some traction in a few markets (European and South American) is that they are Nokia devices.Doing anything but keeping the Nokia brand predominant is quite honestly the most idiotic thing I've heard this year. Nothing unexpected from them though, a company with such a high dumb, close minded executives concentration in the business.
Nobody gives a fuck about Microsoft branded products, get over it. Lose the Nokia brand, lose the mobile game.
gamoniac - Saturday, April 26, 2014 - link
Take it easy, man. It's Friday night after all.inighthawki - Saturday, April 26, 2014 - link
I would buy a Microsoft branded device before buying one with the Nokia name. I sincerely hope they dump the Nokia and Lumia brand quick and switch to the Surface branding.HisDivineOrder - Saturday, April 26, 2014 - link
The problem is that they couldn't keep things the way they were. Nokia's board finally figured out what Microsoft was doing when they sent Elop to them as their new CEO. He'd managed to devalue Nokia's mobility division while simultaneously pushing Windows Phone farther than any other company would do because it was going to lead to self-destruction just to give Windows Phone a miniscule boost.And that's precisely what happened. No other company wanted to torpedo its own value in order to make Windows Phone a distant third player. But by getting Nokia's CEO as their puppet, Ballmer could kill two birds with one stone. Get a hardware player--copying the failed strategy of Google when they bought Motorola--and also get it cheaper than it would have been if they had tried to buy it from the beginning.
I think the fly in the ointment came from the Board. Somehow, they figured out what Elop was doing and why. They started making rumors of an Android device for Nokia. Then the rumors grew. And grew. And grew. Pictures started showing up. Suddenly, a Nokia Lumia phone without Windows Phone became a real possibility.
Faced with the entire Nokia strategy falling apart, Elop sent an urgent message to Ballmer. "They know. You must buy them now if you're going to buy them." Ballmer, already weakened from Windows 8, Windows Phone 7 AND 8, Surface, Windows RT, and Xbox One Reveal flops, shows up after a few billion dollar write-off for another bad purchase. He'd just thrown a billion dollars away securing Skype to basically keep things the same with a company that refuses to integrate well within Microsoft's corporate structure.
So here's Ballmer, redfaced and urgent. "We have to make an offer to buy Nokia now."
You can imagine the looks of horror that must have crossed these men's faces. "What?" would squeak Bill Gates. "You said it would be cheaper to wait."
"I know, but... they got wind of what was going on after years and years of us doing it as slowly as possible. And they're livid! They're going Android."
"BAAAAALLMER!" I imagine Gates yelling. Slamming his fist down, he would send everyone else out of the room. Then Gates would begin a smackdown of legendary proportions on Ballmer. Eventually, the rest of the Board would be let back in the room.
"Steve Ballmer, I protected you for all this time because I truly believed I was infallible and could make no mistake. Especially not a mistake that Steve Jobs would call out in his biography as one of his last stabs at me that you were likely my greatest mistake. Damn you, Ballmer. You made him right."
"Wha? I didn't mean to, bossman. I just thought if I--"
"Silence, man. Have some dignity. Fine. We're buying your stupid Nokia, but this is the last time we're buying something because of you. You have two choices. Step down or get fired. Choose and do it quickly."
"But... but... but I am in the middle of reorganizing Microsoft so I can be AMD Ruiz and establish that whatever happens from here on in I played a large role in it and any success is also mine. And I'm quitting in 2018 just like we always--"
"No. You're leaving Microsoft in 2013, regardless of whether you are fired or you step down. I'll let you finish your stupid reorganization, but don't count on it sticking. Hell, you're the idiot who put us down this stupid Devices and Services strategy in the first place. Devices suck."
"Gates, c'mon, man. Don't kid around. I'll be humiliated if I quit now. Everyone'll know that you're really fir--"
"Yeah. That's the point. Everyone SHOULD already know. Especially when we fork over billions of dollars for NOKIA just to keep them from going Mobility."
"..er..."
"What is it now, Ballmer?"
"Well, Bossman, I just, uh, well... I did field some early talks with the Nokia Board and, uh..."
"What now? Please tell me they're willing to sell."
"Oh, they are! They are! It's just... uh, they won't sell the whole company. Just the, uh... actual mobility R&D and Lumia line."
Gates sent the Board out again. Yelling done, they returned. "So you're telling the Board you can't even secure the Nokia brand we were doing all this for? Just the Lumia line that's been tanked by Windows Phone and didn't even sell for Nokia? How the hell are WE who can't even sell Surface going to make Lumia sell?"
"Yeah, Bossman, I know. I don't know how this could have happened."
"Oh, I do. YOU happened, Ballmer. YOU HAPPENED! God. So now it's just millions for the Nokia mobility division without the brand--"
"Uh, Bossman?"
"Please don't tell me there's more."
"Yeah. Uh, well. Haha, Bossman, funny thing. They, uh, still want billions. When I said if it didn't have the Nokia brand, how was it worth billions, they said, uh, 'If we go Android, you got nobody. That's worth billions.'"
"Damn them. I'd love to blame Elop for this catastrophe, but you know what, Ballmer? It's all you. You're the one that refused to give the man a phone OS strategy that didn't involve obsoleting the phone OS on three separate occasions with apps that don't cross the three OS's in either direction. You're the guy who actually thought pricing Surface the same as iPad was a bright idea. God, Ballmer. Just get out. Just go. I want your resignation on my desk in a month."
"But, Bossman... what about my--"
"You have until then to finish it. Best work quickly. And send your stooge, Don Mattrick in next. I got some words for him, too."
"Yeah, Bossman. About that..."
"..."
"He didn't come into work since last Friday. I saw him carrying a box of his stuff and this big grin on his face. When I said, 'Have a great weekend!' he said to me, uh, 'Screw you, ho's, I'm out! ZYNGA!'"
"Well, at least that's one problem that resolved itself. I wish all YOU problems resolved themselves. Preferably by falling down a flight of stairs."
"...I think I'm gonna go, Bossman!"
"Your first good idea in a decade."
darkich - Sunday, April 27, 2014 - link
Props for a good morning read..that was pretty great, although tendentious to the point of being wrong in just about everything.
I've read yesterday that Microsoft will actually HAVE the right to use Nokia brand name.
As for Google's "fail", it was in fact a pretty darn ingenious move.
Have a look at this!
"Using one of the industry's recent patent auctions as a baseline, in December of 2010, Novell sold off its portfolio of 882 patents for $450 Million. A simple division calculation leads us to a value of $510,204.08 per patent. Why not round that figure off you ask? Well, let's look at the patent value of the Motorola acquisition.
Forgetting that Motorola also makes mobile phones, let's say the entire value of the acquisition was in their 24,500 patents and applications. At a $12.5 billion price tag, that equates to…drum roll please…$510,204.08 per patent. Can anyone guess what heuristic they used in the board room in valuing the deal?
In the Motorola acquisition, Google bought a patent portfolio and got a mobile phone business thrown in for free"
darkich - Sunday, April 27, 2014 - link
..and in addition, of course, they sold the mobile phone business basically further lowering the patent acquisition for billions of dollars.hero4hire - Sunday, April 27, 2014 - link
All your logic is ruining his fan fiction. His rant was almost as tired and small guy congratulatory as the movie antitrust with (fake Microsoft) spying on everyone's garage.Nokia lost the smartphone race slower than BlackBerry but it was going to be 1 or 2 with Symbian or Meego or whatever. I sold my stock long before elop because Nokia had no clear direction when the other 3 (BlackBerry counted then) were well defined. The best product doesn't always win, especially with all the mismanagement BEFORE elop
hero4hire - Sunday, April 27, 2014 - link
*"was it going to be 1 or 2...?"
ddriver - Saturday, April 26, 2014 - link
I guess they will be keeping the trademark.darkich - Saturday, April 26, 2014 - link
What trademark?I guess you're referring to Lumia because the name Nokia cannot be used by Microsoft.
Nokia will keep on, it just won't be making phones anymore