DHAKA: Microsoft has agreed a deal to buy Nokia`s mobile phone business for 5.4bn euros ($7.2bn; £4.6bn).

Nokia will also license its patents and mapping services to Microsoft.

The companies said that the deal would be finalised in early 2014, when about 32,000 Nokia employees will transfer to Microsoft.

While Nokia has struggled with competition from Samsung and Apple, Microsoft has been criticised for being slow into the mobile market.

"It`s a bold step into the future - a win-win for employees, shareholders and consumers of both companies," said Steve Ballmer, chief executive officer of Microsoft.

The transaction is subject to approval by Nokia shareholders and regulators.
Priority move

Microsoft, one of the biggest names in technology sector, has struggled as consumers have shunned traditional PC and laptops in favour of smartphones and tablet PCs.

The Nokia takeover completes Microsoft`s move from being a software-focused business to a major hardware player with a games console, tablets and now handsets all being made under its roof.

It will be interesting to see whether Samsung, HTC and Huawei remain committed to the Windows Phone platform following the acquisition. However, the move appears to recognise that Nokia dominates sales on WP handsets - recent analyst reports suggest the Finnish firm`s Lumia range accounts for more than 75% of the market.

Another consequence of the action will be that Stephen Elop, Nokia`s chief executive, returns to Microsoft just three years after he left. His experience running the handset firm has to make him a favourite to replace Steve Ballmer bearing in mind the Microsoft boss has pledged to stand down within 12 months.

Critics say the firm has been too slow to respond to the booming market for mobile devices. It launched its Surface tablet PCs last year but sales of the devices have been relatively slow.

Analysts said that the company wanted to make sure that it got its strategy right in the mobile phone market.

"Mobile is an area of tremendous potential but it has been one of weakness for Microsoft," Manoj Menon, managing director of consulting firm Frost & Sullivan told the BBC.

"Clearly the number one priority for the company is to get its mobile strategy right. From a strategy point of view, this deal is the perfect step, The only question is how well they can execute this plan."

Ben Wood, an analyst at telecoms consultancy CCS Insight, said: "It`s a necessary gamble by Microsoft to break into mobile, but given its complete reliance on Nokia for Windows Phone devices and the competitive position of Apple and Google with rival phone platforms an understandable move.

"It completely reshapes Microsoft`s business pushing it firmly into hardware. But it also raises big questions about the sustainability of other firms, including HTC and Blackberry, remaining pure-play phone makers," he added.
`Tighter integration`

Nokia was once a leader in mobile phones, but the firm`s sales fell 24% in the three months to the end of June from a year earlier.

It sold 53.7 million mobile phones during the quarter, down 27% on last year.

However, sales of its new Lumia phones, which run a Microsoft operating system, rose during the period.

Mr Menon said that the deal between the two companies would help to bring the "hardware closer to the operating system and achieve a tighter integration".

"This should help Microsoft make a more effective strategy to compete in the mobile sphere," he said.

Microsoft has also agreed to a 10-year licensing arrangement with Nokia to use the Nokia brand on current mobile phone products.

Management changes

Nokia also announced changes to its leadership team as a result of the sale.

Stephen Elop will step down as the president and chief executive of Nokia Corporation and resign from the company`s board.

The firm said that he will become the executive vice president of the Devices & Services unit, adding that it expects him to "transfer to Microsoft at the anticipated closing" of the deal.

The transfer of Mr Elop to Microsoft comes at a time when the company is looking for a new chief executive.

The current head of the company, Steve Ballmer, announced last week that he would be retiring and is expected to leave the company within the next 12 months.

Mr Elop who left Microsoft to join Nokia in 2010, has been cited by some as one of the frontrunners to replace Mr Ballmer.

Source: BBC
BDST: 1228 HRS, SEP 03, 2013
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