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Wednesday, 4 September 2013

Microsoft Set to Take Over Nokia’s Phone Business for $7.2 Billion.

Microsoft Set to Take Over Nokia’s Phone Business for $7.2 Billion.


The Finland phone maker company which once dominated the mobile phone market now falls into the arms of U.S giant software maker, Microsoft. Two days back Microsoft announced that it will now handle Nokia’s phone business and license its patent for $7.2 billion (€5.44 billion) to stand in the competition against its all time rivals, Apple, the developer of trending iPhone & iPad and Google, known for the best mobile operating system, Android.

Nokia's CEO Stephen Elop and Microsoft's CEO Steven Ballmer
Nokia's CEO Stephen Elop and Microsoft's CEO Steven Ballmer

It was considered as major step in company’s progress transforming itself 
from software maker for desktop and laptop to mobile phones.
"It's a bold step into the future — a win-win for employees, shareholders and consumers of both companies, It's a signature event" said by Microsoft CEO Steven Ballmer to reporters at Nokia's headquarters in Finland a day ago.

Nokia's CEO Stephen Elop and Microsoft's CEO Steven Ballmer
Nokia's CEO Stephen Elop and Microsoft's CEO Steven Ballmer

Out of $7.2 Billion, $5 billion (€3.79 billion) are paid for the Nokia mobile phone manufacturing unit including Lumia series and $2.2 Billion (€1.65 billion) are paid for using Nokia’s patent for 10 years license agreement. Also Ballmer added that Microsoft will set up new data center to serve European customers which will cost more than $250 Millions.

It was also part of the news that Microsoft is looking for new leader as Steven Ballmer, current CEO is retiring next year. Nokia’s CEO, Stephen Elop, who left Microsoft in 2010 and joined Nokia as a CEO will rejoin Microsoft after the deal is completed but yet not decided what role he will play. Risto Siilasmaa, Nokia Board chairman will work as CEO till the new CEO is appointed.


Microsoft's CEO Steven Ballmer and Nokia Board Chairman Risto Siilasmaa
Microsoft's CEO Steven Ballmer and Nokia Board Chairman Risto Siilasmaa

It is expected that deal will be completed within the first two or three months of 2014 after approval by Nokia’s shareholders and regulations. If everything went according to schedule, around 32,000 Nokia employees will be transferred to Microsoft who is having 99,000 employees currently.

In 2011, Nokia joint hands with Microsoft to use Microsoft’s software in Nokia’s mobile phones. But still it lacks to beat Apple iPhone and Google Android phones. As now Microsoft will look over mobile phones, it will be interesting to see all the three rivals competing against each other to survive in the market.

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