For the last three year Nokia has been seeing a downturn in the smartphone market due to rising android-based devices and poor reception of their latest Symbian smartphones. Then in early 2011 they made an alliance with Redmond-based Microsoft in hopes to boost the presence in the smartphone market for both companies. Rumors soon started about Microsoft planning to buy Nokia outright. Yesterday, those rumors finally came true as Microsoft bought the mobile device portion on Nokia for the price of $7.17 billion.
Before making the purchase, Microsoft saw a big increase in their share of the smartphone market. The Redmond giant is hoping that by making this purchase the upswing in the mobile market will continue and hopefully accelerate. The sale of their mobile division has already been of some benefit to Nokia as their stock has seen a 34% rise to 3.97 euros a share.
"Now is the time to build on this momentum and accelerate our share and profits in phones," Microsoft CEO Steve Ballmer said in an email to Microsoft employees. "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 that empower people around the globe at home, at work and on the go, for the activities they value most."
The deal with Nokia includes some of their executives including Nokia CEO Stephen Elop will be heading over to Microsoft to run the division. For Mr. Elop it will be a return to the company that he left in 2010 to take over as the CEO of Nokia. Two of the other executives that will also be joining Microsoft are Jo Harlow and Timo Tiokanen who will head the smart device team and mobile phone team.
In July, Microsoft CEO Steve Ballmer announced a major re-organization of the company where he appointed Julie Larson-Green as the head of the new device division. Then last month Mr. Ballmer made an announcement that he would be retiring within the next 12 months. Could this new purchase and executives from Nokia coming over to Microsoft mean that Julie Larson-Green is being targeted to take over when Steve Ballmer retires?
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