Microsoft buys Nokia’s phone business

Microsoft is paying $5 billion for Nokia’s Devices and Services Business. In addition, it is paying about $2.18 billion to license Nokia’s patents and to license and use Nokia’s mapping services.

By Janet I. Tu

Seattle Times staff reporter

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Nokia CEO Stephen Elop

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Microsoft is buying Nokia’s cellphone handset business as part of a $7.2 billion deal, the two companies announced Monday.

The acquisition represents an aggressive move by Microsoft to compete in the smart-devices market, as the company transforms itself into a devices-and-services business.

“To accelerate our growth in the phone business, we thought it was important to move even faster,” Microsoft CEO Steve Ballmer said in a phone interview.

The businesses that Microsoft is getting from Nokia brought in about $19.7 billion revenue in 2012, about half of Nokia’s sales that year.

Nokia retains other substantial parts of its business, including networking infrastructure and services, technology development and licensing, and mapping and location services.

Microsoft and Nokia, both of which have struggled to compete against Apple and Google Android phones, have been close partners since Nokia announced in February 2011 that it was making Windows Phone its primary smartphone operating system. Its Lumia line of Windows Phone has been credited with Windows Phone’s gain over the past several months, even as the operating system struggles to build beyond its currently worldwide market share of about 3.3 percent

With the acquisition, instead of having to go through two companies for each innovation or marketing move, “we remove any boundaries in agility,” Ballmer said.