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Behind the scenes of the Microsoft-Nokia deal

Posted: , by Alan F.

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Behind the scenes of the Microsoft-Nokia deal
A couple of published reports on Sunday, reveal what happened behind the scenes of the Microsoft acquisition of Nokia. The impetus for the deal developed from a phone call from Microsoft CEO Steve Ballmer to Nokia Chairman Risto Siilasmaa. Ballmer indicated that both men needed to talk. That call took place in January. Three months later, Microsoft made a presentation to Nokia at a high powered New York City law firm. Siilasmaa's response was hardly encouraging. "We're on different planets," Siilasmaa said.

The 45 minute presentation also revealed that the two sides were not eye to eye on the pricing or the structure of a deal. For example, there was a question about who would own Nokia's mapping services. It was two months before, in February, when the two executives first met to discuss a possible acquisition of Nokia by Microsoft, and it was at this meeting that Ballmer said that innovation could come faster if Microsoft owned Nokia. Then there were the savings that could add up from ending the duplication of certain key departments, like advertising and promotion. A well received (and quite funny) ad for the Nokia Lumia 925 that showed a Wedding day fight between Apple iPhone and Android fans was actually produced by Microsoft, not Nokia. Why have two teams duplicating efforts, especially when Windows Phone was well behind iOS and Android. A focused, stronger team was needed to challenge the leaders.

Both sides also had concerns about contracts that were expiring. Nokia could have selected a new OS to team with at the end of 2014, while Microsoft could have signed with another handset manufacturer like HTC or BlackBerry. These possibilities were also part of the background of the deal. At a meeting in Finland in June, Microsoft committed itself to provide more financing to Nokia. During that meeting, Nokia made it clear that it would not part with HERE Maps, something that Microsoft had to deal with. During a meeting in New York the next month, Nokia agreed to give access to the mapping service's source code to Microsoft so that the latter firm could customize it anyway it wanted to. Nokia, in the meantime, would be able to license the mapping service to others if a deal was struck.

Eventually, a series of PowerPoint slides were created that outlined the terms of the deal. A September 3rd deadline was set for due diligence and for both sides to make a decision. Ballmer and his team flew to Finland on September 1st, and Nokia and Microsoft both agreed to the deal which was announced two days later.

source: NYTimes, AllThingsD via AAS

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posted on 08 Sep 2013, 15:53 5

1. Nathan_ingx (Posts: 3009; Member since: 07 Mar 2012)


"...and they lived happily ever after."
I wish i could say that right now.

posted on 08 Sep 2013, 16:20 9

6. james004 (Posts: 471; Member since: 15 May 2013)


well one lived happily ever after.

posted on 08 Sep 2013, 16:28 6

7. Bernoulli (Posts: 1443; Member since: 01 Sep 2012)


and that one wasn't nokia

posted on 08 Sep 2013, 17:34 4

14. UrbanPhantom (Posts: 949; Member since: 30 Oct 2012)


NOK is trading past 5 bucks now, and there is no more talk about bankruptcy. I'd call that a happy ending...

posted on 08 Sep 2013, 16:33 3

8. _Bone_ (Posts: 2126; Member since: 29 Oct 2012)


Stephen Elop?

posted on 08 Sep 2013, 16:52 2

10. Nathan_ingx (Posts: 3009; Member since: 07 Mar 2012)


Stephen Ballmer?
Oh, wait...that's not right.
Steve Elop?
Dang...which one is it?

posted on 08 Sep 2013, 20:05 4

26. InspectorGadget80 (Posts: 6427; Member since: 26 Mar 2011)


And we will miss NOKIA best handset company ever lived.

posted on 08 Sep 2013, 15:53 8

2. jiezel91 (Posts: 58; Member since: 28 Jul 2011)


I have read the original article and I couldn't stop myself from laughing so hard when I read that during one of the meetings, Steve Ballmer fell off a clear glass table. Steve Ballmer really is one of the clumsiest (and unintentionally funny) CEO's out there...

Now back to the essence of the deal, I don't think Nokia Devices and Services division is worth just $4.99 billion. Surely, this price is WAY TOO CHEAP!

If you factor in the talent pool of world-class designers, highly-skilled engineers, the most advanced mobile phone factories in the world, the 32,000 employees that they are effectively transferring under their umbrella, the technologies and expertise acquired from Scalado and Smarterphone, and most importantly, the Nokia brand name, clearly $4.99 billion dollars is way too low! Serioulsy, what were they thinking?!

Also, I have read that Microsoft now owns 8,500+ design patents (correct me if I'm wrong on this) plus a 10-year license to ALL of Nokia's remaining patents for just $2.17 billion?! Again, that's way too cheap!
Nokia's patents are considered the most comprehensive and the HIGHEST QUALITY patents in the mobile industry. It's not like some (nonsense) patent related to gimmicks like pinch-to-zoom, rounded icons or whatever but real technological breakthrough. So why on earth did they agree for such a measly price?

Hopefully, the institutional investors see all of those and reject the deal. The deal significantly undervalues what Nokia has. Nokia deserves way more than that.

posted on 08 Sep 2013, 16:02 1

3. jiezel91 (Posts: 58; Member since: 28 Jul 2011)


EDIT 3rd paragraph: ^the Lumia and Asha brand with Nokia brand name recognition.

posted on 08 Sep 2013, 16:13

5. jiezel91 (Posts: 58; Member since: 28 Jul 2011)


And here's an article on the GSMArena Blog which echoes my views too:

http://blog.gsmarena.com/microsoft-nokia-deal-scaled-against-other-recent-acquisitions-in-tech/

posted on 08 Sep 2013, 17:37

17. UrbanPhantom (Posts: 949; Member since: 30 Oct 2012)


This deal is good for Nokia, and it will only be rejected if Apple, Google, or some other large player is willing to make a better offer. If they don't, then Nokia is selling off their devices and patents for exactly what the market is willing to pay...

posted on 08 Sep 2013, 19:57

24. jiezel91 (Posts: 58; Member since: 28 Jul 2011)


I agree. The deal is good for Nokia. The advantage is Nokia will no longer have to deal with the loss-making Devices & Services division.

However, that's not what I'm pointing out. What I still can't believe is that, the board of directors at Nokia agreed for such a price.

posted on 08 Sep 2013, 20:04 2

25. jiezel91 (Posts: 58; Member since: 28 Jul 2011)


Still, that's not to say that I'm happy Nokia being acquired by Microsoft (or any other company). I wanted Nokia to be independent.

There's just no denying that they are one of the most innovative companies out there. Just that, they are ruined by bad management decisions.

posted on 08 Sep 2013, 16:04 2

4. Kishin (Posts: 600; Member since: 30 May 2013)


I am going to see what happens in 6 months from now.

Its the only way to see what become of Nokia and MS

posted on 08 Sep 2013, 20:44 1

28. Timmehor (Posts: 599; Member since: 09 Mar 2013)


Yep, same, that's the best way to see and put up with the situation, people should stop judging Microsoft of it's past problems, for a company to spend a larger amount of money means they want to do something seriius with it.

posted on 08 Sep 2013, 21:02

29. -box- (Posts: 3786; Member since: 04 Jan 2012)


Precisely, especially with a new CEO at the helm.

posted on 08 Sep 2013, 23:27

37. Reality_Check (Posts: 269; Member since: 15 Aug 2013)


Having a larger pocket doesn't necessarily translate to success. Just have a look at the Surface RT, Zune, etc.

posted on 09 Sep 2013, 05:12

45. Timmehor (Posts: 599; Member since: 09 Mar 2013)


That's very true, but Microsoft are acquiring a very, VERY, important company, this is a huge step for Microsoft and has upset many people. I think they will play it safe, well I HOPE!

posted on 08 Sep 2013, 16:38 9

9. Cod3rror (Posts: 60; Member since: 06 Apr 2013)


Nokia management(and not just the last one) are idiots that made a mistake after mistake after mistake. It was only a matter of time before the company folded.

The reason any Windows Phones got sold at all was because Nokia had lots of diehard fans that bought phones because they were Nokia and despite WP, not because of it. Now that Nokia is gone, and those fans are soured towards Microsoft and feel betrayed by Nokia, good luck selling a Microsoft branded phone with an OS that is more locked down than iOS, has an ugly UI and much less features than either Android or iOS.

Unless Microsoft pulls of a miracle of epic proportions and accelerates development to ludicrous levels, Nokia will be a loss write off next year on Microsoft's earnings report, like so many other companies Microsoft acquired before.

posted on 08 Sep 2013, 17:17 4

11. 14545 (Posts: 1106; Member since: 22 Nov 2011)


I actually agree with you. I think WP succeeded over the last year because of nokia fans and the developing market phones. But the OS is by far worse than all of the others out there. As a former WinMo user turned Android user, I would take a newer revamped WinMo over WP any day. In fact I would consider another windows device if they dumped this horrible failure that is WP and W8.

posted on 08 Sep 2013, 17:32 2

13. UrbanPhantom (Posts: 949; Member since: 30 Oct 2012)


14545, you are entitled to your own opinion. However, it would be nice if you could provide some legitimate critera to back-up your statements. You hate WP8 with a passion? Fine - explain how it's vastly inferior to Windows CE, or Android, or iOS, or whatever. Don't just throw stupid comments around without providing any supporting evidence for your arguments. Fanboys like yourself are notorious for saying how much they hate something without providing any details to support their arguments...

posted on 08 Sep 2013, 17:55 3

18. 14545 (Posts: 1106; Member since: 22 Nov 2011)


If I were a "fanboy" why would I have used another OS? I have provided evidence, I hate metro. PERIOD. It flat sucks. You can't change backgrounds, you can't customize, well, you can't really do anything with it. At least with CE you would do all the aforementioned things. Sorry I don't love your flavor of OS so I wouldn't then be deemed a "fanboy". So yes, you're right. I'm just a "fanboy". A "fanboy" that has actually used other OS. I look forward to Mozzillas attempt at an OS as we need a viable third alternative. I was hoping that BB10 would be that. But they just seem too late to the party. Just out of curiosity, what flavor of OS do you use, and have you ever used anything other than it? I would have been happy with windows had just revamped WinMo 6.5. I bought the TP2 and about 6 months later they left me, and others, high and dry with no path for future upgrades. The only thing I have ever been a fanboy about was HTC. But that didn't last too long because they screwed us with their inability or uncaring about legacy devices. As evidenced by my Evo View, Thunderturd and Rezound. But yep, I'm a total fanboy.

posted on 08 Sep 2013, 18:16 3

20. juandante (Posts: 301; Member since: 23 Apr 2013)


I agree with you 14545 (whatever your pseudo means). Although I hate Micromoney, and I always used Symbian to WinMo back 2007-2006, I felt myself betrayed by Micro$oft when they announced WP7 so much it was limited and outdated compared to WM6.5. WM6.5 is like Android, it's just that it is closed source. This just made me hate more M$ than before, and the bad thing for them it is they will have to make ultra efforts (if not impossible) for me to love their nasty arrogance back.

posted on 08 Sep 2013, 18:31 1

23. 14545 (Posts: 1106; Member since: 22 Nov 2011)


The numbers are just numbers that were significant in my life when I was younger. I've been using them and my interweb alter as far back and I can remember, so I just keep it because it is convenient. Anyway, I'm like you. If I give you money for your products and you screw me in the future, then don't expect me to continue supporting you. That's how I feel about both HTC and MS now. But like you said, when MS released WP7 I felt like they had gone back in time a released a crappier version than what they already had. Android felt like a natural progression from WinMo line so that's why when I played with it I ultimately ended up moving to it.

posted on 09 Sep 2013, 04:27

42. microsoftnokiawin (Posts: 966; Member since: 30 Mar 2012)


sailfish is well on the way and it will take it's 1st steps off ex nokia fanboys and n9 users :/

posted on 08 Sep 2013, 18:06

19. 14545 (Posts: 1106; Member since: 22 Nov 2011)


Why don't you provide evidence that WP is better with their crappy "live tiles" that can only be resized. Everyones WP8 device LOOKS EXACTLY THE SAME. It has to, because there isn't anything you can do with it. A person that is a "fanboy" is someone(like yourself) who can't see the inherent flaws within the OS. I know android has a slow updates, but at least certain manufacturers as of late do actually update their OS. WP7 to WP8 HAD NO UPDATE PATH. So all those people that bought WP7 device just got flat screwed with no recourse whatsoever. iOS gets updates, but never includes the newest features. However, iOS is semi customizable, that can't be said for WP. Android OEM's do usually lack a tiny bit in build quality compared to other OS and does have some lag depending on the device, but personally those two things I would deal with for the inherent customization that comes with the OS. But yep, I'm the fanboy.

posted on 08 Sep 2013, 21:17

30. -box- (Posts: 3786; Member since: 04 Jan 2012)


Bull. They look significantly different, much more than ios or an android owned by someone who doesn't know they can or how to change the wallpapers - typically the same as those who don't/can't change wallpapers on their computers. Heck, even my Lumia 900's Start Screen looks different than my Lumia 925's (though there are many organizational similarities since both have the same user). If you don't like Live Tiles, you can remove ALL of them (but why I cannot fathom).

That said, while sometimes I miss having a picture background, I don't miss they cluttered and typically clashing icons-on-background look. On my prior Symbian phones (I had 3 I believe) I frequently opted for a solid or gradient background for my fuller home screens, and reserved pictorial backgrounds for my pages with a majority of (or exclusively) widgets. With that in mind, thinking of Live Tiles as essentially widgets with very little space between them, a picture background would be wasted unless one made gaps between them for the picture to be seen.

posted on 08 Sep 2013, 21:35

31. 14545 (Posts: 1106; Member since: 22 Nov 2011)


Or, like you said, don't use live tiles at all. I don't use but a couple of icons and a transparent weather widget so I can see my background. Same with my desktop, I have icons turned off and the focal point is my background image. The point is, WP8 isn't customizable. I don't consider "live tiles" customizable. It's tiles that are just different colors and contain information I don't care about. I, along with most other people, like to have photos of ones life they can change on a regular basis. Then, given MS's recent past and SELLING licenses, it doesn't seem like there is much of a chance of seeing an actual upgrade past 8.1(if it even gets that).

And there is only so much difference that can be accomplished in a screen of square boxes.

posted on 08 Sep 2013, 17:18 4

12. Whateverman (Posts: 3196; Member since: 17 May 2009)


Serious question here... Are the current Nokia fans/users happy with this deal? I'm sure the WP fans have got to love this, and I can't blame them. But how do the NOKIA fans really feel about this? Personally, I think this SUCKS because I think M$ is just going to screw it all up. They don't have the vision Nokia had, and as great of a company M$ is, I just think they will fail as a handset manufacturer. I hope I'm wrong, but getting rid of the Nokia name was strikes 1 and two! Their next step has to be a homer or this was all for noting.

P.S. Elop was a Trojan horse. He brought Nokia down for the sole purpose of letting M$ buy them out. I wish Nokia had seen this coming like so many of us did.

posted on 08 Sep 2013, 17:35 1

15. Nathan_ingx (Posts: 3009; Member since: 07 Mar 2012)


Nokia fan here...it's hard to swallow this fact.
But i can't say anything as of now.
I will have to see the outcome of this partnership.

posted on 08 Sep 2013, 17:37

16. Commentator (Posts: 2399; Member since: 16 Aug 2011)


I'm no Nokia fan, but I think this deal proves that either Nokia didn't have much of a "vision" in the first place, or that Microsoft's buying of them was part of their vision.

Nokia did see this coming, they approved it themselves. If we can see it coming from our couches and we have literally nothing invested (save the pride of being a "fanboy"), don't you think people that have invested their entire lives to the company would have seen it?

posted on 08 Sep 2013, 18:21

21. juandante (Posts: 301; Member since: 23 Apr 2013)


No, be careful, I was part of... Elop's vision ! Remember he is not from Finland, didn't know anything about Nokia, and was a high grade Microsoft employee

The CEO would be a real person from Nokia this would never had this ending

posted on 08 Sep 2013, 18:28 2

22. Commentator (Posts: 2399; Member since: 16 Aug 2011)


The CEO of Nokia was the person the board selected to be the CEO of Nokia, and that CEO was... Stephen Elop...

It's nice to think that Elop's vision isn't Nokia's vision, but it really is, because he represents the company and the shareholders.

posted on 08 Sep 2013, 20:36 2

27. papss (unregistered)


Not to mention that he can't make a single decision without their (the shareholders) signing off. It couldn't and wouldn't have been his sole selling of the company including all other movements.

posted on 08 Sep 2013, 21:42

34. Sonny_09 (Posts: 49; Member since: 24 May 2013)


And I quote from steve jobs, "Hiring "Stephen Elop" (John Sculley) is the worst mistake I ever made"

posted on 08 Sep 2013, 21:47

35. Commentator (Posts: 2399; Member since: 16 Aug 2011)


And Apple's board did away with that mistake.

What has Nokia's board done with Elop?

posted on 08 Sep 2013, 21:35 1

32. -box- (Posts: 3786; Member since: 04 Jan 2012)


Nokia fan here (I've only ever used Nokia phones except for a brief dalliance with an Android for a few days and even then I carried my Nokia with me because the android I used was highly unreliable as a PHONE), been using cell phones since the early 2000s (3590).

As for my feelings, I'm mildly distressed that the brand itself won't be attached to the smartphones if the deal as-is goes through, but the product will be the same, just a different name, like when HP bought Palm (but with MUCH better management and potential), or when Ford bought Volvo, Jaguar, Land Rover, and Aston Martin (and later sold them off after improving them tremendously), or Boeing bought McDonnell Douglass. I'm hopeful that the deal and results are as good as Ford's and Boeing's, rather than as disastrously as HP, or GM buying SAAB and Hummer. Microsoft's doing good stuff lately, so I am optimistic this will go well, especially with the eyes of so many on them.

posted on 09 Sep 2013, 04:32 1

43. microsoftnokiawin (Posts: 966; Member since: 30 Mar 2012)


nokia fan here and i take shame in my username and like nathan said it's hard to swallow i believe and i will be getting a jolla phone next and over the next few years will see if microsoft keep the nokia branding or not and if they make good of the deal and from there decide what to get as for currently not happy i was hoping nokia would develop multiple OS's tbh :( oh well

posted on 08 Sep 2013, 23:08

36. 7thspaceman (Posts: 1082; Member since: 14 Feb 2011)


Hmm one of Tech crunch's writers got the scoop that Nokia also did not have enough funds to continue it's Windows 8 initiative and was also having some financial problems with Nokia's other businesses to such a degree that they could have been facing Bankruptcy. Nokia was so in need of CASh they already got some bonds.from Microsoft that they will cash in to pay some needed business operation expenses and business deals with Siemen's. Microsoft's cash will save Nokia and allow them to be an independent business making money off of the assets they did not sell to Microsoft a lot of people put down Elop but fail to remember Noka was in big financial trouble before Elop got there the meego OS as in it's infancy, Symbian OS was not good enough to compete with IOS or Android. even if nokia went Android there was no guarantee Nokia would survive.Elop did make Nokia Windows 8 smart phones best selling MS OEM and that is a fact. It was Nokia's other businesses operations that were failing. I think that is why microosoft backed off the first time they tried to buy it.

posted on 08 Sep 2013, 23:30

38. 7thspaceman (Posts: 1082; Member since: 14 Feb 2011)


a lot of people are putting down Windows phone 8 but fail to remember that it is a new smart phone OS it's 14 months old.. Microsoft windows 8 Programmers have had to make new programs to put on this NEW OS to be frank with you they have moved pretty fast. Apple IOS and Android smart phones have been out there at least twice as long as Windows Phone 8.
Microsoft is bring out it's Windows phone 8 blue updates and other updates to it's Windows phone 8 software the fact is Apple Iphone and Android smart phone Owners at locked into their OS and any new comer OS will not really sway them away from what they are used to using. Microsoft's best bet is to go for the millions upon millions of NEW smart phone buyers
these good people have no allegiance to Apple Iphones or Android smart phones.

posted on 08 Sep 2013, 23:50 1

39. leondarsh (Posts: 19; Member since: 16 Jul 2011)


Very sad to here that.. I grow up with nokia phones and now this happening... Guys is there any way to stop this deal? Bcoz is this happens than we will never see Android phone from nokia..
Can't we just put petintion? And pardon for my english...

posted on 08 Sep 2013, 23:53

41. Glim12808 (Posts: 393; Member since: 26 Oct 2011)


Wrong! After 2015 Nokia can make phones again - might even be an Android if they want to. MS just bought the Devices & Services division and not the whole company.

posted on 08 Sep 2013, 23:51

40. Glim12808 (Posts: 393; Member since: 26 Oct 2011)


Nokia will still be alive after the Devices & Services division is acquired by MS. In fact they can still make phones after 2015, and might even make an Android phone if they want to. Although I personally feel Nokia will not be too eager that early to go back to making phones based on their difficulty with it right now.

posted on 09 Sep 2013, 04:54

44. Shrihari (Posts: 79; Member since: 29 Jan 2013)


actually there were never two companies one company with 2 empolyees. One CEO was Ballmer and second one mr Flop working at nokia for microsoft.

posted on 09 Sep 2013, 09:19 1

46. AhmadAlsayegh (Posts: 253; Member since: 18 Jul 2011)


I hate the fact that everyone is calling it a "Microsoft buying Nokia deal", it is not really....Microsoft only bought the smartphone and services division, which comes down to Lumia, Asha brands and a couple of other stuff, besides the HEREmaps are licensed only for 4 years, after that Microsoft will have to renew the licenses...Nokia remains the Finnish company, with their own strategies, but not in smartphones... /rant

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