As expected, Microsoft’s $7.2 billion acquisition of Finland-based Nokia’s handset business closed today.
Microsoft will now add to its payroll 25,000 Nokia employees working in more than 130 sites in 50 countries, many in the handset maker’s factories worldwide.
That 25,000 figure is lower than the 32,000 previously announced in part because Microsoft will not buying Nokia’s factory in Masan, South Korea. The factory manufactures component parts for phones and Microsoft is not taking that over because of “excess manufacturing capacity,” a Microsoft spokeswoman said. About 200 people work at that factory. Nokia will be closing that factory, according to its news release.
Microsoft will also not be taking over Nokia’s factory in Chennai, India, because tax liens on Nokia’s assets in India prevent its transfer.
Nokia said in its news release: “In India, our manufacturing facility is subject to an asset freeze by the Indian tax authorities as a result of ongoing tax proceedings. Consequently, the facility remains part of Nokia following the closing of the transaction. Nokia and Microsoft have entered into a service agreement whereby Nokia would produce mobile devices for Microsoft.”
Nokia said it would have more details on the closing of the transaction during its first quarter earnings results announcement Tuesday.
Microsoft and Nokia announced last September the plan for Microsoft to purchase Nokia’s handset business, as well as to license Nokia’s patents and mapping services.
Today marks the completion of that sale of Nokia’s Devices and Services business to the Microsoft subsidiary, Microsoft Mobile Oy.
For now, there are no plans to change the names or branding of the Nokia products, and Microsoft will not be using “Microsoft Mobile” as a brand name for those products.
The Finnish company retains the Nokia brand, though Microsoft has licensed the Nokia brand for 10 years for Nokia’s basic mobile phones. Microsoft has also licensed the Nokia brand “for the purpose of marketing Nokia branded smart devices for a limited time,” a Microsoft spokeswoman said.
There are no significant plans to shift where Nokia’s work is currently being done. “The former Nokia employees will stay largely in place, geographically, and few if any transfers to Microsoft headquarters are planned,” a Microsoft spokewoman said.
One move that will take place, as previously announced, is the return of former Nokia CEO (and former Microsoft exec) Stephen Elop, who now becomes executive vice president of Microsoft’s Devices group.
“Today is an exciting day as we join the Microsoft family, and take the first, yet important, step in our long-term journey,” Elop said in a letter published on the Microsoft Mobile Conversations site.
(Elop will be participating in an Ask Me Anything session at 6 a.m. Seattle time — 1 p.m. GMT — Monday on the Conversations site. More details on that are here.)
Nokia’s Lumia smartphones and tablets and Nokia’s mobile phones now become part of Microsoft Devices Group, which also includes Xbox, Surface, Perceptive Pixel (large touchscreen) products and accessories such as keyboards and mice.
Microsoft will now begin honoring all existing Nokia customer warranties for existing devices.
With the deal, Microsoft becomes one of the world’s largest handset makers.
Nokia is the world’s No. 2 phone maker, behind Samsung, when taking into account all handsets including basic mobile phones, feature phones (which have more features than basic mobile phones but less computing power than smartphones), and smartphones. But it is No. 8 in smartphones.
Here are some Nokia numbers, compared with Microsoft’s, to give an idea of what Microsoft is getting with the deal:
Nokia and Microsoft entered a partnership in February 2011, where Windows Phone would become Nokia’s primary smartphone platform.
But while the partnership has seen sales grow of Nokia’s Lumia Windows Phone, the operating system’s market share is still tiny. Windows Phone represented only 3 percent of the smartphones sold worldwide in 2013. Microsoft’s tablet operating system, meanwhile, held just 2 percent of that market, according to research firm Gartner.
While acquiring Nokia’s handset operations brings on a whole slew of manufacturing challenges that Microsoft has never had to face before, it’s also an opportunity for Microsoft to gain market share for its mobile operating systems, while also playing a key role in new CEO Satya Nadella’s vision of a Microsoft that thrives in a “mobile first, cloud first” world.
“Today we welcome the Nokia Devices and Services business to our family. The mobile capabilities and assets they bring will advance our transformation,” Nadella said in a news release. “Together with our partners, we remain focused on delivering innovation more rapidly in our mobile-first, cloud-first world.”