As Microsoft looks to bolster its mobile offerings, the company today announced that it has purchased substantially all of Nokia's Devices and Services business for around $7.2 billion.
Microsoft and Nokia have been in a partnership together since February 2011, and Nokia's Lumia smartphone series, which comes with Microsoft's Windows Phone OS as standard, has seen increasing success in the last year or so.
With this acquisition, Microsoft will be hoping to greatly improve the revenue that it brings in through its mobile business. The transaction is expected to be finalized during the first quarter of 2014.
The deal means that Nokia will now assign its existing mobile licenses and patent agreements to Microsoft. Its existing license with Qualcomm, for example, will now benefit Microsoft, while its rights under agreements with IBM, Motorola Mobility and Motorola Solutions will also fall under Microsoft's wing.
Microsoft also believes that the acquisition will help the company to properly compete with both Google and Apple, since it will now be able to drive down costs on Windows Phone devices by utilizing Nokia's existing IP licenses.
Microsoft will be able to use the Nokia branding on any mobile devices released that are based on the Series 30 and Series 40 operating systems as part of a 10 year licensing arrangement between the two companies -- Nokia will continue to own and maintain the Nokia brand throughout this period.
Approximately 32,000 Nokia staffers are expected to transfer to Microsoft as part of the move, meaning that around 24,000 people will remain at Nokia. The company now plans to focus on network infrastructure services, and mapping and location services.
And current Nokia president and CEO Stephen Elop has stepped down, citing the need to "avoid the perception of any potential conflict of interest between now and the pending closure of the transaction." He will now fall into the role of EVP of Devices & Services, and join Microsoft once the deal is finalized.
Risto Siilasmaa, chairman of Nokia's board of directors, will take up the role as interim CEO while Nokia looks for a permanent replacement for Elop.
