Nokia Acquisition Deal Cements Partnership

Nokia’s mobile device division and critical related patents will transfer to Microsoft ownership under a US$7.2 billion acquisition and license agreement announced in Sept. 2013. The deal reduces uncertainty regarding the continued existence of the struggling Windows Phone platform, which could ultimately prove to be an interesting target for enterprise applications. It also gives Microsoft the technology and facilities to build its own phones, which could help the company design and produce phones more efficiently, while advancing Microsoft’s goal of becoming a devices and services company rather than relying on OEM partners to produce hardware that runs its software.

Manufacturing, Patents Obtained

Microsoft began a major partnership with Nokia in Feb. 2011 when Nokia committed to the Windows Phone platform as the primary OS to be used on Nokia devices, shifting away from its once-dominant Symbian smartphone OS.

OEMs such as HTC, Samsung, and Huawei also build Windows Phone devices, but Nokia’s Lumia line accounts for more than 80% of the Windows Phone market by units sold. Nokia sold 7.4 million Windows Phones in the second quarter of 2013, although this number is dwarfed by the sales of iPhones (about 32 million) and Android-based phones (about 178 million) in the same quarter. Nokia also sold more than 50 million feature phones (less capable and lower cost phones than smartphones) in the quarter. These phones run Nokia’s Series 40 OS, and many of them are marketed under the Asha brand.