Microsoft acquiring Nokia: license is the keyword

Obviously, this is not about PureView, nor about mobile photography. Not at all. But I think it's important enough to write about it (many PureViewClub members wrote me, it's what woke me up this morning).

Recently, Kantar Worldpanel showed  a record share for Windows Phone - and we know what that means for Nokia. After Microsoft has denied several times to be interested in buying Nokia, maybe that's the reason they are now: Nokia is growing again. But where many sources talk about a "takeover", a large part of the deal appears to be about licensing.

In short, from what I've read from Microsoft's own announcement, Microsoft will pay €3,79 billion for the complete hardware division and license Nokia's patent portfolio for €1,65 billion for a period of 10 years. And it will license HERE mapping service as well for a period for four years. As it will license the Nokia brand. So "license" is a keyword many seem to be overlooking.

You can read if for yourself in these quotes from the terms of the agreement:

- Microsoft will acquire substantially all of Nokia’s Devices and Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services-related production facilities, Devices & Services-related sales and marketing activities, and related support functions. At closing, approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide.

- As part of the transaction, Nokia is assigning to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements. Microsoft is also acquiring Nokia’s Mobile Phones business unit, which serves hundreds of millions of customers worldwide, and had sales of 53.7 million units in the second quarter of 2013.

- Microsoft will acquire the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products. Nokia will continue to own and manage the Nokia brand. This element provides Microsoft with the opportunity to extend its service offerings to a far wider group around the world while allowing Nokia’s mobile phones to serve as an on-ramp to Windows Phone. 

- Nokia will retain its patent portfolio and will grant Microsoft a 10-year license to its patents at the time of the closing. Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement in perpetuity.

- In addition, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four-year license.

So basically, Microsoft is buying the complete hardware division with all the 32000 people working at Nokia - for €3,79 billion. That's also the part of Nokia that is costing the company the most, I guess.

The rest appears to be about licensing from Nokia, which will not sell the patent portfolio, the brand name, the HERE mapping service. That makes it very hard to compare with the way Google bought Motorola Mobility, or the way Microsoft bought Skype earlier).

However, the conlusion over at The Verge is harsh: there will never be another Nokia smartphone. I didn't get that from the agreement right away to be honest, and I'm not even sure it's competely correct...

Let's read it again: Nokia will continue to own and manage the Nokia brand. This element provides Microsoft with the opportunity to extend its service offerings to a far wider group around the world while allowing Nokia’s mobile phones to serve as an on-ramp to Windows Phone.

But with all people gone, who'se going to work on new Nokia devices? Hmmm... I don't really get this part I'm afraid :-/ Update: Meanwhile, I've understood the brand name will be Lumia from 2014 on, but I couldn't get this confirmed by Nokia's Press Office yet.

I'm looking forward to the reaction of the shareholders... They will still have to agree to this deal. And as always, I'm looking forward to what you make of all this...

Update:
Press release Nokia
Open Letter from Steve Ballmer and Stephen Elop

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