Microsoft Buys Nokia for $5B

Looking to follow in the steps of Apple and Google on the mobile phone front, Microsoft Corp. has agreed to buy Finland’s Nokia for $5 billion in a move that would but it further into the mobile hardware business.

Nokia, once the No. 1 handset-maker in the world and famous for pioneering “candybar” style phones, has fallen on hard times in the Apple iPhone era. Two and a half years ago it inked a deal with Microsoft to develop phones for the Windows Phone operating system; but now it appears MSFT is ready to bring that in-house.

In a letter to employees on Monday night, CEO Steve Ballmer said Microsoft would, in addition to the outright acquisition payout for Nokia’s services and devices unit, pay another $2.2 billion to license Nokia’s intellectual property and use the Nokia brand for the next 10 years.

“This is a smart acquisition for Microsoft, and a good deal for both companies,” Ballmer wrote in the missive. “We are receiving incredible talent, technology and IP. We’ve all seen the amazing work that Nokia and Microsoft have done together.”

He noted that Microsoft and Nokia have seen a 78% year-over-year growth with the Lumia devices and have a greater than 10 percent market share in 10 markets. The integrated company will still have a ways to go to catch Apple and Android though; expanding its mobile handset share will likely revolve to a certain extent on developing the business market for Lumia handsets going forward—and therefore on channel partners.

The addition of the handset business will expand Microsoft’s mobile device strategy, which was kicked off with the release of the Surface tablet. Channel partners are just now beginning to get access to that device for business customers; it remains to be seen how the company delivers Nokia phones for that segment, and what its channel strategy will be.


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