Microsoft Now Owns Nokia's Smartphone Business

Microsoft announced on Friday that it has completed the acquisition of Nokia's Devices and Services business. Microsoft's Suzanne Choney reports that the company not only owns Nokia's smartphone and mobile phone businesses, but the design team, most of the manufacturing and assembly facilities and operations, and sales and marketing support.

"The acquisition also brings key capabilities around [the] supply chain, distribution, operational processes and systems and skill in managing hardware margins to Microsoft," Choney writes. "The unified company will benefit from speedier execution and best-in-class business operations."

From the press release: "Reporting to Microsoft CEO Satya Nadella is former Nokia President and CEO Stephen Elop, who will serve as executive vice president of the Microsoft Devices Group. Elop will oversee an expanded devices business that includes Lumia smartphones and tablets, Nokia mobile phones, Xbox hardware, Surface, Perceptive Pixel (PPI) products, and accessories."

Microsoft will honor all existing Nokia customer warranties for existing devices, beginning April 25, 2014, as part of the transaction. The company also welcomes personnel with deep industry experience in more than 130 sites across 50 countries worldwide, including several factories that design, develop, manufacture, market and sell smart devices, mobile phones and services.

"As announced previously, Microsoft will not acquire the factory in Masan, South Korea, and the factory in Chennai, India, will stay with Nokia due to the tax liens on Nokia's assets in India that prevent transfer," the PR states. "As a result, Microsoft will welcome approximately 25,000 transferring employees from around the world."

The company hinted that its Microsoft Mobile Oy subsidiary will develop, manufacture and distribute Lumia, Asha and Nokia X mobile phones and other devices.

"We feel very excited that on Day One, the team will have an already established joint operating plan," said Tom Gibbons, Microsoft corporate vice president who is responsible for the Nokia integration. "Customers should see a bunch of great end-to-end experiences that really empower them to have very enjoyable, very comprehensive solutions to things that they want to get done, whether you're talking about smartphones or feature phones. The feature phone product family coming to Microsoft will start to have more of the Microsoft services shipped on those phones right out of the gate."

Microsoft is expected to pay Nokia €3.79 billion for the Devices and Services division, and another €1.65 billion to license Nokia's portfolio of patents, totaling €5.44 billion, or around $7.2 billion USD. However, Nokia is betting that the final price tag will be bigger than what was originally expected nearly eight months ago.

"The estimate of the adjustments made for net working capital and cash earnings was slightly positive for Nokia, and we currently expect the total transaction price to be slightly higher than the earlier-announced transaction price of EUR 5.44 billion after the final adjustments are made based on the verified closing balance sheet," reads Nokia's PR.

This marriage between Microsoft and Nokia's former Devices and Services business should prove to be an interesting topic, especially when it comes to the first product stemming from the deal. Will it be more of the same, or will we see something innovative like Amazon's rumored 3D phone? There does seem to be loads of excitement gushing between the two entities; let's hope that all of that excitement will be poured into a product that will truly turn up the competitive heat on Google, Samsung and Apple.

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