Microsoft announced Monday that it would acquire Nokia’s mobile phone business in the latest blockbuster news that signals a massive transformation of the tech giant.
Just two weeks ago, the company revealed that Chief Executive Steve Ballmer would retire in the next 12 months. Last week, Microsoft said it had struck a deal with an activist investor, seeming to indicate the company was under pressure to revamp its business.
The deal with Nokia would do just that. It would push Microsoft even further from its roots as a software company to become the “devices and services” company that Ballmer has discussed in recent months.
“We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution,” Ballmer said in a press release.
Under the terms of the deal, Microsoft will pay $7.2 billion to purchase Nokia’s devices business as well as license all its patents.
The deal echoes Google’s purchase of Motorola. It’s also not entirely surprising.
Microsoft has a partnership deal in place with Nokia to get the device maker to focus on building Windows Mobile gadgets. Also, in the wake of Ballmer’s retirement news, Nokia CEO Stephen Elop was one of the names mentioned as a possible CEO candidate.
Several top Nokia executives will leave Nokia to join Microsoft, including Elop, who will become Nokia’s executive vice president of devices and services.
“Building on our successful partnership, we can now bring together the best of Microsoft’s software engineering with the best of Nokia’s product engineering, award-winning design, and global sales, marketing and manufacturing,” Elop said in a press release. “With this combination of talented people, we have the opportunity to accelerate the current momentum and cutting-edge innovation of both our smart devices and mobile phone products.”
The remaining parts of Nokia’s businesses will still be based in Finland and the company is expected to appoint a new CEO.
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