Nokia was once the phone in everyone’s pocket, but now it has been bought out by an American multinational software corporation, “Microsoft”. Microsoft Corporation and Nokia Corporation announced that the Boards of Directors for both companies have decided to enter into a transaction whereby Microsoft will purchase substantially all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.The acquisition represents an aggressive move by Microsoft to compete with the smart-devices market, as the company transforms itself into a devices-and-services business.
Microsoft has paid $5 billion for Nokia’s Devices and Services Business. In addition, about $2.18 billion is paid to license Nokia’s patents and to license and use Nokia’s mapping services.The two companies had been integrating their mobile businesses since early 2011, when Nokia’s Canadian CEO and former Microsoft executive, Stephen Elop, agreed to use Microsoft’s Windows phone operating system for its new devices.Once the deal is done, a number of Nokia executives will join Microsoft.For now, Elop is stepping aside as Nokia CEO to become executive vice president of devices and services. Nokia Chairman Risto Siilasmaa will serve as interim CEO.
Microsoft, one of the biggest names in the technology sector has struggled, as consumers have shunned traditional PCs and laptops in favour of Smartphones and tablet PCs. The firm has been too slow to respond to the booming market for mobile devices.The company wanted to make sure that it got its strategy right in the mobile phone market. Thus, in the right point of view the deal they entered is a perfect solution.Until last year, Microsoft did not make any major products itself. The company announced that it was making the transition to a company that provides both devices and services.
Microsoft chief executive officer Steve Ballmer said that: “It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services.”Risto Siilasmaa, Chairman of the Nokia Board of Directors said that: “For Nokia, this is an important moment of reinvention and from a position of financial strength; we can build our next chapter.”