This has been a contentious subject the last couple of years, but all controversies have been finally laid to rest. Nokia has announced that it has signed an agreement to enter into a transaction whereby “Nokia will sell substantially all of its Devices & Services business and licence its patents to Microsoft for EUR 5.44 billion in cash”.
This is official, so you can take it to the bank.
Nokia. Elop. Microsoft. Tomi Ahonen. Etcetera, etcetera. It has finally happened. History just got made.
What’s the deal?
Here are details of the transaction:
Microsoft will acquire substantially all of Nokia’s Devices & Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions. At closing, approximately 32,000 people are expected to transfer to Microsoft, including approximately 4,700 people in Finland. Nokia’s CTO (Chief Technology Office) organization and patent portfolio will remain within the Nokia Group. The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9 billion, or almost 50%, of Nokia’s net sales for the full year 2012.
As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing, and Microsoft will grant Nokia reciprocal rights related to HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity. Of the total purchase price of EUR 5.44 billion, EUR 3.79 billion relates to the purchase of substantially all of the Devices & Services business, and EUR 1.65 billion relates to the mutual patent agreement and future option.
Additionally, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license. This revenue stream is expected to substantially replace the revenue stream HERE is currently receiving from Nokia’s Devices & Services business internally. If the transaction closes Microsoft is expected to become one of the top three customers of HERE.
Say goodbye to Nokia the mobile manufacturer
Nokia as a brand will continue to exist, but not as a mobile manufacturer. They will continue to focus on:
– NSN, network infrastructure and services;
– HERE, mapping and location services; and
– Advanced Technologies, technology development and licensing.
Nokia will retain its headquarters in Finland. Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have employed approximately 56,000 people at the end of the second quarter 2013.
Tomi Ahonen was right, but I disagreed with him on the point that this was all Elop. As far as I am concerned, the Nokia board was in on the act right from the get-go. They brought him in deliberately to make this happen. It is the reason why they wouldn’t remove Elop. And that was why regardless of what any of us screamed or said, the deal was going to happen. End of.
This is the end of Nokia the mobile manufacturer. Say Hello to Microsoft, the hardware manufacturer. Microsoft finally joins Apple and Google at that table, owning the garden end-to-end. Ladies and gentlemen, all hell just broke loose in the mobile sector. I’m going back to bed for now. Kick up a storm in my absence please.
Meanwhile, all those of you who have been dreaming of an Android-powered Nokia smartphone…..you can wake up now. It is never happening.
PS1: Microsoft needs to keep the “Nokia” brand on their phones. To phone consumers, Microsoft is an unknown name. But mention Nokia…
PS2: What happens now to Asha…?
PS: What will the reaction of other Windows Phone smartphone manufacturers be?
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