Nokia-Microsoft deal: Top 20 highlights
Alas, it has happened. Nokia has been sold to its long time suitor, Microsoft. The Nokia-Microsoft courtship bloomed under Stephen Elop who gains considerably from this deal. Well, lets not kid ourselves – most of us would have been happier with Nokia as an independent entity rather than Microsoft’s smartphone arm. But, Microsoft is not just any company – it has a treasure trove of billions and no matter what, even though it has the bigger profit margin from the deal, Nokia too will get access to a huge budget and Microsoft’s technology. But rephrasing Steve Ballmer’s words – this will be a ‘win-win’ only if executed the right way.
Here are some highlights of the deal:
1. Most importantly, the deal will be finalized only if shareholders give their assent to the same i.e. If shareholders say no (a rare possibility reflected by rise/fall in share prices) everything goes back to what it is.
2. Microsoft will get to win Nokia’s phone business – the whole of it, every aspect covered in the terms of the operating system, apps and hardware.
3. Microsoft gets hold of a patent portfolio larger than any companies out there at dirt cheap prices – just to get things into perspective – Microsoft also purchased Skype but for a larger price tag of $8.5 Billion than Nokia’s $7.17 Billion price, effectively making Skype worth more than Nokia.
4. The transaction is expected to close in the first quarter of 2014.
5. Nokia’s strength might be used to strengthen Microsoft’s core tablet business and since it’s Windows 8.1 onwards PC system is also one adaptive as a touch/tablet OS, Microsoft will use it to strengthen everything.
6. Microsoft’s insecurities are clear – it states in its official document that it wants to replace Google as one alternative for the world.
7. Microsoft gets penetration of key markets all over the world.
8. Nokia’s employee base to remain the same. It will retain its Finnish base and Most people at strategic positions in Nokia will have the same in Microsoft’s Nokia.
9. Nokia’s CEO Stephen Elop set to become the new Microsoft CEO again putting Nokia somehow under his purview only.
10. Windows Phone hopes to make $40 per unit instead of the current $10 per unit.
11. Microsoft not only gets the Asha and Lumia series, it also gets a 10 year licence to use the Nokia trademark on feature phones.
12. Microsoft states that it will ‘combine’ its Nokia deal with its current deal with Samsung, HTC and others to effectively use Nokia patents and technology on all Windows phones.
13. Microsoft states it now might offer the cheapest OEM out there with help of Nokia’s patents.
14. Nokia hand will sign over its rights from its agreements with Qualcomm, Motorola and IBM giving it those benefits too. Nokia’s sales team and working rhythms poised to remain the same.
15. 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
16 . Nokia brand on Nokia’s own mobile devices until December 31, 2015.
17. Microsoft has said it will draw from its overseas cash resources to fund the transaction.
18. At closing, approximately 32,000 people from Nokia are expected to transfer to Microsoft, including approximately 4,700 people in Finland. Nokia’s CTO (Chief Technology Office) organization and patent portfolio will remain within the Nokia Group.
19. Nokia has plants in India, but has already warned the government that it might take its business elsewhere, so the future of those workers is currently doubtful.
20. Microsoft has agreed to make immediately available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible bonds to be issued by Nokia maturing in 5, 6 and 7 years. This money might be used mostly for software and not hardware expansion.