In a bold move, Microsoft has settled a deal to buy Nokia’s mobile phone business for $7.2 billion. Included in the deal are Nokia’s patents and mapping services, which will be licensed to Microsoft.
Microsoft Chief, Steve Ballmer described the deal as a “big, bold step forward” and that the company was transforming itself from one that “was known for software and PCs, to a company that focuses on devices and services”.
“We’ve done a lot of great work in the two-and-a-half years that we’ve been in partnership with Nokia, going literally from no phones to 7.4 million smart Windows phones in the last quarter that was reported,” he said.
The announcement comes at a time when Microsoft is struggling due to consumers choosing smartphones and tablets over PCs and laptops. It has been accused of being too slow to enter the mobile device market.
Nokia on the otherhand was once the leading name in mobile phones but its sales were down 27 percent in the quarter compared to last year. The Nokia Lumia phone, which runs a Microsoft operating system however, saw sales rise in the same period.
Manoj Menon, managing director of consulting firm Frost & Sullivan feels that the deal between these two well known companies could help bring the “hardware closer to the operating system and achieve a tighter integration”.
“This should help Microsoft make a more effective strategy to compete in the mobile sphere,” he said.
Due to the sale, Nokia has announced that there will be changes to the management at the company. Stephen Elop is to step down as president and chief executive of Nokia Corporation and resign from the company’s board. It is likely he will “transfer to Microsoft at the anticipated closing” of the deal, the firm said.
It has been suggested that he could be one of the forerunners to replace Steve Ballmer, who announced last week that he will be retiring within the next year.
The companies are both awaiting the approvall from Nokia’s shareholders and regulators before the sale can be completed. Nokia has said that once it has been completed it plans to concentrate on three key businesses: the network equipment manufacturing, mapping and location services and the development and licensing of technology.
[Image via Tech Geek]