Microsoft is acquiring Nokia’s cellphone business for $7.17 billion. But what all does Microsoft get for it considering smartphones these days are not just about hardware but an intricate web of patents, licenses and other assets. Let’s take a look at what Microsoft is getting for plonking all that money for its vision of becoming a hardware and services company.
Along with almost all of the devices and services business that includes both the mobile phones (feature phones) and smart devices (smartphones) units, Microsoft will also acquire Nokia’s design team and all operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions. About 32,000 employees including 4,700 employees in Finland will be transferred to Microsoft at the end of closing the deal. The business contributed $19.13 billion or almost 50 percent of Nokia’s net sales in 2012.
Microsoft will also get non-exclusive license to its patents for 10-years. Microsoft will also become a licensee of Nokia’s HERE services and will pay Nokia for a four-year license. However, this will enable Microsoft to use HERE assets across its product portfolio and is not exclusive to Windows Phone devices.
Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems. Upon the closing of the transaction, Nokia would be restricted from licensing the Nokia brand for use in connection with mobile device sales for 30 months and from using the Nokia brand on Nokia’s own mobile devices until December 31, 2015.
Microsoft can also expect Nokia’s senior leadership including Stephen Elop; Jo Harlow, Executive Vice President, Smart Devices; Juha Putkiranta, Executive Vice President, Operations; Timo Toikkanen, Executive Vice President, Mobile Phones; and Chris Weber, Executive Vice President, Sales and Marketing to join Elop to transfer to Microsoft once the acquisition is completed.
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