Microsoft said Tuesday it will buy Nokia Oyj’s phone business and license its patents for 5.44 billion euros ($7.2 billion), making its boldest foray yet into mobile devices and bringing Nokia executive Stephen Elop back into the fold.
Elop, a former Microsoft executive, will return as Microsoft’s board ponders a successor to current CEO Steve Ballmer, who will depart sometime in the next 12 months after initiating a reorganization intended to transform the software company into a devices and services group in the mould of Apple Inc .
The sale of Nokia’s phone business marks the exit of a 150-year-old company that once dominated the global cellphone market and remains one of Europe’s premier technology brands, even though Apple and Samsung Electronics’ ascendancy all but reduced it to irrelevancy in Asia and North America in recent years
Nokia – reduced to its networks business, navigation offerings and patent portfolio after the sale – is still the world’s No. 2 mobile phone maker behind Samsung, but it is not in the top five in the more lucrative and faster-growing smartphone market.
Market Analyst Brenda Kelly believes the deal may buy some time for Nokia.
“I think this is a pretty decent step for Nokia,” Kelly said.
“In terms of their shareprice we’ve seen a huge decline there and it gives them a little bit more bolstering in the hardware market, particularly with Microsoft in partnership so I think in that respect it does give a little bit more upside for their shareprice but I do feel that in the grand scheme of things it might be a little bit too late for that company.”
Canadian Elop, hired from Microsoft in 2010, has been cited among the frontrunners to take over from Ballmer, criticised for missing the mobile revolution, kicking off Microsoft’s foray into the market with the tepid-selling Surface tablet only in 2012.
Buying Nokia’s gadget business thrusts Microsoft deeper into the hotly contested market, despite some investors urging the company to stick to its core strengths of business software and services.