Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer announce plans for a broad strategic partnership to build a new global mobile ecosystem at a press conference in London, UK February 11, 2011. Nokia and Microsoft plan to form a broad strategic partne

Early Tuesday morning, Microsoft announced that it would be purchasing Nokia’s devices and services business. The transaction has been approved by the Boards of Directors for both companies, and is expected to close in Q1 of next year, pending regulatory approval.

As for the terms of the deal, Microsoft is paying EUR 3.79 billion to purchase substantially all of Nokia’s cell phone business, and EUR 1.65 billion to license the company’s patents, for a total price of EUR 5.44 billion (or roughly $7.2 billion in US dollars) in cash…

From Microsoft’s press release:

“It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services,” said Steve Ballmer, Microsoft chief executive officer. “In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.”

The move will build on the current “strategic partnership” between the two companies, which was announced back in February 2011. And it will not only help Nokia strengthen its financial position, but also help Microsoft further unify its mobile software, hardware and services.

Here’s Stephen Elop on the deal:

“Building on our successful partnership, we can now bring together the best of Microsoft’s software engineering with the best of Nokia’s product engineering, award-winning design, and global sales, marketing and manufacturing,” said Stephen Elop, who following today’s announcement is stepping aside as Nokia President and CEO to become Nokia Executive Vice President of Devices & Services.”

While the news is significant, it’s not surprising. Aside from the fact that the two firms have a long-standing relationship, Nokia has been the premier manufacturer of Windows Phone hardware, and has seen strong success in recent quarters with its Lumia handsets.

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Microsoft, on the other hand, has shown some interest in creating its own mobile devices, but has yet to do so successfully. The Redmond-based company took a nearly $1 billion hit last quarter due to unsold Surface inventory, and it continues to struggle to sell the tablet.

It’ll be interesting to see what comes of this major acquisition, but it could be a while. The whole thing is reminiscent of Google’s $12.5 billion purchase of Motorola last year, and of course we have yet to see the fruit of that deal outside of the recently-announced Moto X device.

  • Karma

    In before the flame wars begin.

  • Guest

    They might as well purchase Blackberry while they’re at it

    • Pitchy

      Or let RIM crumble and pick up the pieces for cheap. It will be all about the patents and IP.

  • Boss

    LOL

  • @sexyhamthing

    Surface- like telephone…. anyone else creaming?

    • I’m creaming for a Surface-like telephone with the beauty of pre-iOS 7 or Windows 7. Only thing stopping me from getting a Windows Phone is how fugly their UI look and iOS 7 seems to now be taking the same kid-painting route, so, Android is my only remaining option…when I lose my jailbreak.

  • Royce Otero

    Microsoft should just worry about window and Xbox . Everything else they should give up. Nobody wants that window crap on phones or tablets.

    • Boss

      Competition is good means companies like Apple & Google have to step it up and not just a little crap spec update

      • Rowan09

        Competition is good but Microsoft didn’t need to purchase Nokia for competition to exist, they already make phones.

      • Jimothy

        I don’t think Microsoft will have to worry about money. Ever. They bought it just because they could.

      • Rowan09

        Any company can do broke, but I agree Microsoft most likely won’t go broke. Rich people don’t buy companies to lose money so believing they bought a company just for fun is crazy, especially not for 7.2 billion. Look at the surface sales it’s a failed product yet they still are not selling it at a heavy discount, why because money matters and that would hurt their future plans for the revived version.

  • Frank Anthony

    A BIG MISTAKE! After Microsoft has ruined Skype.. Now the Nokia, well i can say REST IN PERFECT PEACE NOKIA and Goodbye Finland. So sad there won’t be any more Finnish but Finished stuffs 🙁

  • Saeed Ghattas

    And that’s what microsoft need to get more failure? LOL

  • Pusheen

    I don’t understand how this can be a bad move for microsoft. I guess Microsoft will earn more than ever

    • Rowan09

      I think it’s a bad move because none of the Nokia phones are selling like hot cakes, I don’t see purchasing a line for 7.2 billion dollars worth it unless the company is selling phones like crazy.. I have friends with Windows phones and I’ve honestly never seen anyone with a Nokia phone.

      • Pusheen

        You’re right, but earning isn’t always related to how a product sells, imho

      • Rowan09

        Earnings show a lot, it’s shows if you should continue backing a product. You can have the best product in the world but if no one gets it and purchases it, it’s a flop and you will have to stop selling that product.

      • Jimothy

        Especially with all those Surface tablets just laying around.

      • Pitchy

        They screwed up the tablet by releasing two versions… RT and Pro. RT should have never been released. Pro should have been the focus the entire time… and at a much lower price point than what they originally pushed. The keyboard cover should be included instead of a separate purchase. If they had the Surface Pro with keyboard at the same price point as an iPad, they would have had something good going for them. But it was an over priced tablet with an extra $100 for the keyboard and no one was going to touch that.

        On top of that, they used way too much drive space for the OS and installed apps. If you get a 64gb tablet, you better have close to 64gb available.

      • Ted Forbes

        Agreed!

      • ✪ aidan harris ✪

        Apple buys smaller technology companies all the time so for Microsoft to buy a well established part of a company how can this be bad for them?

      • Rowan09

        This is not a small company and neither is it a small acquisition. Microsoft is doing horrible in the smartphone market Nokia is also doing bad in the smartphone market so I don’t see why they made the acquisition. Maybe it’s for patents like Google did with Motorola.

      • Pitchy

        Patents, it’s about patents and licensing them. Then that gives them a dedicated hardware manufacturer for phones and tablets.

  • ClaudieX X

    Saw it coming…

  • Linton Findlay

    microsoft are in a pickle as it is, windows 8 being a flop, surface being a flop, xbox one getting bad public feedback, windows phone having a pretty small market share with no devs. how many more cock ups can they afford?

    • Pitchy

      Personally I love Windows 8. Windows 8 also has a higher market share than OS X, so does that mean that OS X is a flop as well?

      • Linton Findlay

        Mac OS is always going to have a pretty bad market share compared to windows because of the price, and stigma that macs are only for professionals. people might love windows 8, but it was received badly and many people do dislike it so they wont upgrade

      • Pitchy

        A lot of people hate change and dropping the classic start menu in favor of metro was a big change. I love it. It was long overdue as it hasn’t changed much since Windows 95.

        OS X is a great OS and I would love to see gain more share, but the iPad is killing that. The iMac could use a price drop to get it into more homes… but people are looking at like well the iPad is going to do most of what I want so why do I need a $1800 computer just to Facebook on.

        My wife on the other hand is a graphic designer by trade and feels tied to Mac even though Photoshop, Illustrator and InDesign function pretty much the same on both Windows and OS X and there are things on the Windows version that work better like using the scrollwheel to scroll through fonts, blending modes etc. But because that’s what she learned on, that’s what she is sticking with so we are about to buy our third iMac so she can bring some of her work home so she doesn’t have to work late to meet deadlines. I help her out on some of the freelance stuff on my gaming PC which has crazy high specs and still doesn’t come close to the price of an iMac. I have an i7 ivy bridge processor, 32gb of ram, two 7990s in crossfire, 256sdd with four 1tb drives… to get a Mac (Mac Pro or iMac with that kind of specs would cost 2 or 3 times what I paid for my gaming PC.

        With Apple you are paying a premium price for the name and design. OS X works fantastically on a “hackintosh” A little $600 HP can run OS X like a dream.

  • FOFF

    MS will use nokias factories to create more surface flops

    • Ted Forbes

      Or to make mops to clean up the mess. LoL!