Tuesday, September 03, 2013

Nokia stock surges as Microsoft acquires its Devices and Services unit in $7.17B deal

A deal folks wondered about since Nokia and Microsoft became "partners" or sorts, with Nokia adopting Windows Phone as its next generation device platform, came to fruition on Monday. Microsoft has acquired Nokia's Devices and Services unit, bringing the Lumia lineup -- far and away the most "powerful" among Windows Phone OEMs -- under the auspices of the Redmond, Wash.-based giant, AllThingsD reported.

"Powerful," of course, is well-placed in quotes, as Windows Phone continues to trail badly among the current generation of mobile platforms. This move, of course, has to weigh heavily on the corporate minds of fellow Windows Phone OEMs such as Samsung and HTC.

The deal is expected to close in Q1 of 2014, with Microsoft paying $7.17 billion, which includes money not just for Nokia's device unit, but also for the licensing of Nokia’s patents.

32,000 people are expected to move from Nokia to Microsoft, including 18,300 that are, the company said, "directly involved in manufacturing."

The acquisition appears similar in some ways to Google's acquisition of Motorola Mobility in 2011, including the fact that this is bound to shake up past and fellow Windows Phone OEMs such as HTC, Huawei, and Samsung. However, Microsoft was quite clear, just as Google was: It wants to continue licensing Windows Phone to third parties.

On Tuesday, Microsoft executive VP Terry Myerson said:
[...] acquiring Nokia’s Devices group will help make the market for all Windows Phones, from Microsoft or our OEM partners.

This goes to the core of how I think about my new job running the Operating Systems Group here. We have exciting ideas, and so do our OEM partners. Our partners bring innovation, diversity and scale to Windows. I’m always thrilled by the beautiful new device designs our partners are continually bringing to market. There’s a breadth of choice in form factor, finish and materials that deliver unique devices at a variety of price points. These devices feature innovative high resolution displays, audio, cameras, multi-finger touch screens, creative new hinge designs, new sensors, and other hardware enhancements that provide choice in the market and great experiences for users.

Our OS group mission is to enable the innovations of our hardware partners to shine through on the Windows platform. We collaborate with our Microsoft hardware teams in the same way we partner with our external hardware partners: we discreetly discuss technical and business opportunities, make shared bets, empower each other to do great work, and then operate closely together to delight our shared customers. We look forward to building new products together that will provide valuable business opportunity for the ecosystem and enable OEMs to deliver huge value to their customers, from consumers to the largest enterprise.
Now that it has divested itself of its mobile device unit, what is Nokia's plan now. Reportedly, the Espoo-based company will focus on three core technologies: NSN (its network infrastructure); HERE (its maps and location-based services); and Advanced Technologies (a licensing and development division).

Microsoft will pay Nokia for a four-year license of the HERE services, which should bring a measure of stability to Nokia -- analysts predicted a terrible Q3 for the company. However, the new Nokia is also a much smaller Nokia.

Nokia, investors welcomed the deal, with the company up some 40 percent to 4.12 euros in Helsinki. In terms of Microsoft, the company opened down $1.60‎ or 4.78 percent on Tuesday, to $31.81.

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