Today morning India woke up to a very important transition in the Tech world. Microsoft acquired Nokia Devices and Service division which include Nokia’s smartphone and mobile phone businesses, their design team, manufacturing and assembly facilities around the world, and teams devoted to operations, sales, marketing and support. This also includes all Nokia Patents which are very valuable in the tech world. A move which was on the cards for some time now yet surprised most people.
Microsoft will pay EUR 3.79 billion to purchase Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of 5.44 billion Euros in cash, this amounts to more than 47,500 crore in Indian Rupee. All money will be funded from overseas cash resources from Microsoft. Nokia has also acquired a 10 year license to use Nokia Brand on Windows phone.
“This is a smart acquisition for Microsoft, and a good deal for both companies. We are receiving incredible talent, technology and IP. We’ve all seen the amazing work that Nokia and Microsoft have done together” said Steve Balmer CEO, Microsoft in an Open Mail to Microsoft employees.
We all have had experience with those firm sturdy Nokia phones which are well known for their durability, long battery standby times and impressive build quality. In India Nokia has a huge loyal fan base that trusts and prefers Nokia Brand and this is evident from huge success of Nokia Asha series in India. This move will left many befuddled if not disappointed.
This transition will see 32,000 Nokia employees transferred to Microsoft. Stephen Elop the current CEO of Nokia will transition to Microsoft even before the transaction takes place and lead an expanded Devices team. Various other top executives like Jo Harlow (lead smart device team), Juha Putkiranta(lead the integration effort), Timo Toikkanen (lead Mobile phone team), Stefan Pannenbecker (lead design)and Chris Weber(lead sales team).
Microsoft explained in a presentation to its employees that presently it was making less then 10 dollar profit on one window phone unit from every Nokia Windows phone sale and had to spend money in marketing and platform support as well, this profit will increase to 40 dollars after the acquisition and along with added bonus like a dedicated design and sales team.
Microsoft states the reason to buy Nokia Phones as to provide “first-rate Microsoft phone experience for users”. Microsoft also believes that this acquisition will lead to better innovation in Windows phone ensuring their growth and survival.
What does this means for Nokia Asha series? Will Microsoft be willing to sell anything without Windows OS in it? How far can Microsoft move after acquiring Nokia known for superior hardware, without significant acceptability of Windows phone Operating system. Answer to all these and many more will start shaping up in the second quarter of 2014 after a hopefully smooth transition in the first quarter. Nokia won’t be making any more phones, at least for the next 10 years! Dont know if to be happy or sad? well, join the club.