Nokia is exiting from the mobile-phone business it once dominated, leaving it mainly as a network equipment maker. Microsoft is making its biggest foray yet into hardware.
Microsoft Chief Executive Officer Steve Ballmer and Stephen Elop, his Nokia counterpart, called the deal a “moment of reinvention.”
Microsoft will pay €3.79 billion for Nokia’s devices unit and €1.65 billion for patents, according to the companies.
With the deal, Microsoft becomes the last major developer of smartphone operating systems to get into the manufacturing business. Apple makes its own handsets, which use its iOS operating system. Google acquired Motorola Mobility last year for about $12.4 billion, giving the company its own line-up of phones for its Android system.
The deal brings Microsoft’s CEO succession into the spotlight. Elop — formerly a Microsoft executive — will return to the Redmond based company. Ballmer declined to say whether Elop would now become, or had already been, a candidate to succeed him as CEO.
Chairman Risto Siilasmaa will become interim CEO of Nokia. About 32,000 Nokia employees will also transfer to Microsoft. The devices and services business generated about 50 per cent of Nokia’s net sales during 2012, worth an estimated €15 billion.
Microsoft will face a balancing act owning Nokia and keeping its other hardware partners, including HTC and Samsung committed to its Windows Phone. Aiming to reassure other phone makers that Microsoft will still support them, Ballmer said that the company was “100 percent” committed to helping its manufacturing partners.