May 2, 2014

After long follow up, Microsoft has finally acquired Nokia Devices and service business for $7.2 billion. This transaction will be completed this Friday, April 25 as it had received all the required regulatory approvals and Microsoft will officially welcome the Nokia Devices and Services business as part of the Microsoft family on same day.


After long follow up, Microsoft has finally acquired Nokia Devices and service business for $7.2 billion. This transaction will be completed this Friday, April 25 as it had received all the required regulatory approvals and Microsoft will officially welcome the Nokia Devices and Services business as part of the Microsoft family on same day.

Last September, Nokia had announced it would sell a substantial part of its devices and services (D&S) business, including assets in India, to Microsoft for $7.2 billion by March 2014.

The closure of the 5.4 billion euro deal, which was agreed in September, had been delayed due to pending approvals, but earlier this month the companies won a crucial nod from Chinese regulators.

“The completion of this acquisition follows several months of planning and will mark a key step on the journey towards integration. This acquisition will help Microsoft accelerate innovation and market adoption for Windows Phones. In addition, we look forward to introducing the next billion customers to Microsoft services via Nokia mobile phones,” said Brad Smith, general counsel and executive vice president at Microsoft, in a blog post on Monday.

Microsoft has plenty of room to accelerate. The global market share of Windows Phone stands at just 3.9%, according to the research firm IDC. But IDC expects that figure to reach 7% by 2018. Between now and then, it also expects the global marketshares of Android and iOS, the two leading mobile operating systems, to decline from 78.9% to 76% and from 14.9% to 14.4%, respectively.

According to an internal letter posted online last week, Microsoft intends to call its new subsidiary Microsoft Mobile.

The deal has changed somewhat since it was announced. Smith said that Microsoft plans to manage the nokia.com domain and related social media sites for up to a year and former Nokia CEO Stephen Elop will be in charge of Microsoft's devices group, reporting directly to CEO Satya Nadella. He also said that Microsoft will gain 21 employees in China who had originally been designated to remain with Nokia's Chief Technology Office, part of the Nokia Group not being sold. Finally, he said that Microsoft will not be acquiring Nokia's manufacturing facility in South Korea, as originally planned.

Microsoft released Windows Phone 8.1, the latest version of its operating system for mobile devices, to developers a week ago. The update introduces several new features designed to compete with the capabilities of Android and iOS. These include: Cortana, Microsoft's answer to Apple's Siri personal assistant; a notification system called Action Center; and improved browsing and battery life.

Though absorbing Nokia Devices and Services will give Microsoft more complete control over its mobile hardware, it won't immediately address the company's software shortfall: The Windows Phone store had only 240,000 apps in February. Apple's App Store and Google Play each boast more than 1 million apps.

However, Microsoft's decision to open source more of its .Net development framework through the newly formed .Net Foundation and its collaboration with Xamarin, maker of a framework for cross-platform development, might encourage more developers to use Microsoft-friendly tools. Those who do so will find it much easier to create Windows app builds from code intended for Android or iOS markets. And in the long run, broader adoption of its development tools should make Microsoft more relevant in the mobile market.

Once the transaction is closed, “the name of Nokia Corporation/Nokia Oyj will change to Microsoft Mobile Oy.” This means that Nokia will no longer exist as a company that makes phones - after more than two decades in which it has been at the forefront of mobile innovation.

Omnie Solutions is an enterprise application development company providing custom web and enterprise mobile application development services to global business. Omnie Solutions has extensive experience and expertise in various technologies to build simple and affordable solutions. Follow Omnie Solutions on Facebook, and Twitter.

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