The deal is worth $7.2 billion, and includes the entire Devices and Services unit as well as a patent portfolio. The deal is expected to close in the first quarter of 2014, subject to shareholder and regulatory approval. For comparison, Microsoft acquired Skype for $8.5 billion two years ago.
The deal gives Microsoft a complete vertical – like Apple, they’ll now control both the hardware and the software of the phones that they produce.
Of course, the acquisition isn’t great news for other Windows Phone manufacturers. Microsoft are still willing to license Windows Phone to other companies as before, but whether those companies will be able to compete against a vertically integrated Microsoft controlling 80-90% of Windows Phone sales will be another story entirely. While HTC and Samsung have yet to comment on the matter, it’s possible that they’ll stop producing Windows Phones, leaving Microsoft as the sole provider.
Nokia CEO and President Stephen Elop is stepping down, and as of today is Nokia’s Executive Vice President of Devices and Services, reporting to an interim CEO from their Board of Directors. Once Nokia is acquired by Microsoft, Elop will lead the Devices team and report directly to CEO Steve Ballmer. Ballmer has already announced that he’s departing in the next year, and it’s possible that Elop will be chosen to succeed him.
Ultimately, the news today is bittersweet. Nokia has left an indelible mark on the mobile landscape, but once the R&D pipeline is cleared there will be no more new Nokia phones. Microsoft has gained a great deal of smartphone talent and the valuable Lumia brand, but now they face additional pressure to grow the Windows Phone market. They’ve stated (PDF) that they expect Windows Phone to reach a 15% market share in five years, with an annual revenue of $45 billion – but that’s a considerable way from the estimated 3% market share that Windows Phone has currently, even with critically well-received hero products like the Lumia 1020.
What do you make of the historic deal? Let us know in the comments below. Thanks for checking out the article and get ready for more news tomorrow!
Image credit: The Verge