Microsoft completed its $7.2 billion acquisition of Nokia today, bringing on board Nokia’s smartphones, its not-so-smart feature phones and a Windows RT tablet.
The deal also marks the return of Stephen Elop to Microsoft as an executive vice president in charge of devices, which include the Nokia products as well as Microsoft’s own Surface tablets/laptops and Xbox. Before signing on as CEO of Nokia in 2010, Elop ran Microsoft’s Office and Dynamics lines of business.
+[Also on Network World: FAQ: The Microsoft-Nokia deal. + Microsoft's Nokia acquisition continues to look like a mistake; FAST LOOK: Windows Phone 8.1]+
With the deal finalized, the name Nokia will be dropped from product lines, so Nokia Lumia phones will just be called Lumias, for example. The Nokia assets, which include about 25,000 employees, will be known as Microsoft Mobile.
Microsoft’s goal with the phone business seems to be scooping up first-time smartphone buyers in developing markets outside the U.S. and Europe where high-end phones from Apple, Samsung and HTC have locked up the market for top-of-the-line phones.
“Microsoft will target the affordable mobile devices market, a $50 billion annual opportunity, delivering the first mobile experience to the next billion people while introducing Microsoft services to new customers around the world,” the company says in a press release. “With a deeper understanding of hardware and software working as one, the company will strengthen and grow demand for Windows devices overall.”
The purchase was the last major acquisition negotiated by former Microsoft CEO Steve Ballmer before turning the reins over to Satya Nadella in February.
Much has been made of Microsoft actually manufacturing its own devices and how that business has much smaller margins and different challenges from making software. With the deal, Microsoft won’t be taking ownership of a manufacturing plant in India because it is having tax troubles with the government there. Instead, Nokia will retain ownership and manufacture devices for Microsoft, essentially blunting Microsoft’s shift to a maker of devices.