Microsoft said that it will acquire Nokia devices and services business for more than $7 billion in all cash transaction. This is the deal many expected will happen from quite sometime. As part of the deal Microsoft will pay Nokia $5 billion for for its devices portfolio and another $2 for it patents. Additionally Microsoft will also license Nokia’s HERE Maps platform for a four year term initially.
Nokia is the biggest supporter of the Windows Phone platform. There are other OEMs like Samsung and HTC who are also using Windows Phone, but they never took it seriously and now they are building more Android phones. Nokia on the other hand is committed to the Windows Platform and built devices that became popular. The Lumia lineup is most successful of any Windows Phone 8 phones and then the lower end Asha range of devices are also popular. As part of the sale Nokia’s Lumia and Asha device divisions will be under Microsoft.
Microsoft will now have the complete ecosystem, with the software, hardware and services all under one roof and will be in a better position in terms of the control than earlier. Microsoft wanted this approach with the Surface devices but that didn’t work, with the Nokia acquisition it can now integrate everything in Windows Phone. Companies with compelte ecosystem like Apple and BlackBerry have varies success. Google acquired Motorola for a similar control.
The deal is beneficial to both Microsoft can now churn out great devices in the form of Lumia’s, the Lumia brand may die eventually though. It is yet to be seen what Microsoft will do with the Nokia devices and services division now.
With this deal Nokia will become a smaller company and will focus on its network business which builds network infrastructure for carriers, operating HERE services division and Advanced Technologies, its licensing and development business.