Microsoft moves into smartphone business

By Rhoda Miel
News Editor

Published: September 3, 2013 2:39 pm ET
Updated: September 3, 2013 2:43 pm ET

Image By: Nokia Microsoft CEO Steve Ballmer

Related to this story

Topics Electronics, Mergers & Acquisitions, Telecommunications

Microsoft Corp. is staking its claim in the global competition for smartphones with its planned purchase of Nokia Corp.'s devices and services business, including manufacturing and design operations.

The acquisition, announced Sept. 3, is expected to close in 2014, with Microsoft paying 5.4 billion euros ($7.2 billion) for Nokia's cell phone business. It will position Microsoft, based in Redmond, Wash., alongside both Apple Corp. and Google Inc. as companies producing both mobile software and hardware.

"Clearly, greater success with phones will strengthen the overall opportunity for us and our partners to deliver on our strategy to create a family of devices and services for individuals and businesses," said Microsoft CEO Steve Ballmer in a letter to employees about the deal.

Microsoft will add 32,000 Nokia employees to its roster, including 4,700 in Finland. Finland will be the hub of research and development for the Microsoft mobile operations. It will also take advantage of Nokia's expertise in supply chain management for global production.

Nokia, based in Espoo, Finland, will retain its network infrastructure business, its advanced technologies group and its mapping and location service, "Here." Microsoft will license the mapping software for use on its phones.

Nokia has smartphone production operations in China, Brazil, Mexico, South Korea and India.

"In many hardware companies, manufacturing labor is primarily outsourced," Ballmer said during a conference call. "But in Nokia, there is more in-sourced manufacturing. Nokia has had a strategy about that, obviously, that they've executed very well."

About 18,000 of Nokia's 32,000 employees moving to Microsoft are in manufacturing, said Amy Hood, executive vice president and chief financial officer.

The two companies have had a development agreement since 2011, with Nokia producing its first Microsoft smartphone in November 2011.

"Windows phone has grown 78 percent in the last year and is now the No. 3 offering in the marketplace," Ballmer said during a news conference. "Nokia Microsoft phones has gone from zero two years ago to 7.4 million units."

Microsoft's move is similar to Google's 2012 acquisition of Motorola Inc.'s cell phone business. Google first Motorola phone, the Moto X, went on sale in August.

Microsoft currently produces software for its own branded platform, with the hardware made by a variety of companies, including Nokia. In a presentation to the press and investors, the company said its success in cell phones — with 300 million devices sold per year — should allow it to move more solidly into tablet devices. Microsoft introduced its first tablet, the Surface, earlier this year.

"Tablets is an area where we absolutely have our own first-priority hardware, and see opportunities to build and strengthen," Ballmer said.

Nokia was once a mobile telephone powerhouse, but has struggled since smartphones hit the market. As part of Microsoft, it will have better footing to compete there, however Ballmer noted that Nokia remains a leader in non-smart with phones sold in developing regions.

"[They are] the first connection with technology that people in many places in the world have with any kind of communications or information technology device," he said. "We look at that as an excellent feeder system into the smartphone world, and a way to touch people with our services even on much lower end devices in many parts of the world."


Comments

Microsoft moves into smartphone business

By Rhoda Miel
News Editor

Published: September 3, 2013 2:39 pm ET
Updated: September 3, 2013 2:43 pm ET

Post Your Comments


Back to story


More stories

Image

RJG buys UK training group G&A

September 30, 2014 11:10 am ET

G&A Moulding Technology Ltd., a United Kingdom-based training and consultancy group, has been bought by RJG Inc., the U.S.-based training business.    More

Image

iPhone 6 supplier Jabil accused of labor violations

September 29, 2014 6:00 pm ET

The same Jabil Circuit Inc. facility in Wuxi, China that faced labor violation accusations last September just before the iPhone 5S and 5C release is ...    More

Image

Clariant extends reach into Asia with acquisition

September 29, 2014 9:54 am ET

Clariant International Ltd. is buying VitaPac (HK) Industrial Ltd., a Hong Kong-based company which produces desiccant packets for the healthcare...    More

Image

Global giant Foxconn to make, sell molding machines

September 26, 2014 2:48 pm ET

For years, Taiwan's Foxconn Technology Group has been the world's largest contract manufacturer for electronics, with more than 1 million employees...    More

Image

Nypro Healthcare continues to grow following Jabil acquisition

September 26, 2014 1:59 pm ET

Nypro Healthcare's newest medical device manufacturing facility offers 200,000 square feet of carefully configured Class 8 clean room molding and asse...    More

Market Reports

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our industry analysis highlights macro industry trends and micro trends faced by companies that do business in Mexico. The report also provides key industry statistics and forecasts to anticipate future industry expansion.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events