The writing was on the wall, or so they said. Nokia, the mobile phone market leader not so long ego is being dismantled and their Devices and Services unit is being gobbled up by Microsoft for 3.79 billion Euros ($5.0 billion). In addition, Microsoft will be licensing Nokia’s patent and mapping assets for another 1.65 billion Euros ($2.17 billion). This $7.17 billion deal announcement comes just after Steve Ballmer announced he’s stepping down as the CEO of Microsoft within an year.
Once the deal is complete (expected in Q1 2014), several Nokia executives, including the current CEO Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen and Chris Weber will be joining Microsoft. In an attempt to make it look kosher, Stephen Elop, the former Microsoft executive who took over Nokia’s mantles just before Nokia went Windows Phone exclusive in February 2011, will be stepping down as the CEO, while Risto Siilasmaa will serve as interim CEO.
The announcement should not come as a shocker for many, as both Microsoft and Nokia have been struggling in the fight against the iPhone and Android ecosystems. Though they managed to upscale BlackBerry, which has put itself on sale, they are nowhere near both iOS and Android in terms of marketshare. But the timing of this announcement is sure to raise some eyebrows. Steve Ballmer is about to relinquish his post as Microsoft CEO, and rumors were rife that Stephen Elop was a probable replacement for Ballmer. This news will now add fuel to the fire.
It’s little shocking to know that Nokia’s devices and services unit, which includes Lumia smartphones and Asha feature phone series, is valued at just $5 billion. That’s below what Google paid for Motorola mobility two year back, but that included the patent portfolio as well. In fact the $5 billion deal is lesser than what Microsoft paid to buy Skype ($8.5 billion) earlier this year. Staggering facts, isn’t it? Just to give a perspective, a single tweet by investor Carl Icahn increased Apple’s valuation by a whopping $17 billion few weeks back.
From the press release,
“At closing, approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide.”
The twitterati is abuzz with jokes and conspiracy theories:
Stephen Elop "Trojan Horse" theory now less "crazy" sounding than it used to be.
— Greg Sterling (@gsterling) September 3, 2013
Stephen Elop did his job rather well for Microsoft.
— Nikhil Pahwa (@nixxin) September 3, 2013
Nokia’s effectively been a subdivision of Microsoft for two years. Now they’re just making it official.
— Marco Arment (@marcoarment) September 3, 2013
Did MSFT also get a free CEO with the NOK purchase? (Or was that the plan all along?)
— Kawaljit Singh Bedi (@kawaljit) September 3, 2013