Microsoft acquires Nokia’s mobile division

Computing giant Microsoft has purchased Nokia’s mobile phone division in a deal thought to be worth more than £4.5bn.

As part of the deal, the Finnish company’s mapping services and patents will also be licensed to Microsoft. After the announcement had been made, Nokia’s shares rose by more than 35 per cent, while Microsoft saw a drop of five per cent.

By the time the acquisition is completed at the start of next year, more than 30,000 members of Nokia’s workforce will have migrated to Microsoft, although it is not yet clear what they will be working on.

While Nokia played a big part in the early days of the mobile phone, it has certainly struggled to keep up with its modern-day rivals Apple and Samsung. Microsoft has also found it difficult to make a dent on the dominance enjoyed by the Android-toting manufacturers, with critics describing the firm’s arrival to the smartphone market as “slow”.

Steve Ballmer, Microsoft’s chief executive, described the deal as a “big, bold step forward”, and said that the firm was working to change the perception that consumers have of it as being a PC and software manufacturer. Instead, Microsoft wants to be known for offering services and devices.

Ben Wood from telecommunications consultancy firm CCS Insight spoke about the move, saying:

“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.”

Just 10 years ago, Nokia released the 1100 phone and went on to sell more than 250 million units – making it the biggest selling electronic device for consumers in the world. While the firm’s shareholders will be relieved with the chance to jump ship in Microsoft’s $7bn deal, the fact that the company had a market value of $150bn just six years ago will no doubt be a bitter pill to swallow.