Well, Microsoft sure is shaking things up lately. On the heels of Steve Ballmer’s retirement announcement, Microsoft says it’s entered into an agreement to acquire "substantially all" of Nokia’s Devices & Services business. The deal will also see Microsoft get ahold of Nokia patents and make use of the Finnish firm’s mapping services.
Here are the details of the agreement. In case you’re wondering, the total transaction price works out to about $7.17 billion in freedom money:
Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash. Microsoft will draw upon its overseas cash resources to fund the transaction. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.
Now, this move didn’t come totally out of the blue. Microsoft and Nokia partnered up way back in February 2011, and since then, just about all of Nokia’s smartphones have been based on Microsoft’s Windows Phone operating systems. That includes the Lumia 820 and 920, which came out roughly a year ago and run the latest release, Windows Phone 8.
This is also the second time a major smartphone OS vendor has acquired a similarly major smartphone maker. In August 2011, Google announced its acquisition of Motorola Mobility for $12.5 billion. The deal closed in May 2012. It hasn’t stirred things up a whole lot, though. Google still licenses Android to other phone makers, and many reports, including this one from CNet News, indicate that Motorola Mobility gets no "special treatment" from Google.
I don’t know what Microsoft has planned for Nokia, but I hope it’s something a little more exciting—because there’s definitely not much excitement surrounding Windows Phone right now. IDC’s latest market share data suggests the operating system had a tiny 3.7% share of shipments last quarter, up from just 3.1% the year before. Windows Phone exclusivity hasn’t worked out all that great for Nokia, either. The company’s latest financials show a 32% year-over-year dive in net sales for the Device & Services business.