Behind the scenes of the Microsoft-Nokia deal

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



1. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

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

6. james004

Posts: 486; Member since: May 15, 2013

well one lived happily ever after.

8. _Bone_

Posts: 2155; Member since: Oct 29, 2012

Stephen Elop?

10. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

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

26. InspectorGadget80 unregistered

And we will miss NOKIA best handset company ever lived.

2. jiezel91

Posts: 67; Member since: Jul 28, 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.

3. jiezel91

Posts: 67; Member since: Jul 28, 2011

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

5. jiezel91

Posts: 67; Member since: Jul 28, 2011

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

17. UrbanPhantom

Posts: 949; Member since: Oct 30, 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...

24. jiezel91

Posts: 67; Member since: Jul 28, 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.

25. jiezel91

Posts: 67; Member since: Jul 28, 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.

4. Kishin

Posts: 706; Member since: May 30, 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

28. Timmehor

Posts: 599; Member since: Mar 09, 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.

29. -box-

Posts: 3991; Member since: Jan 04, 2012

Precisely, especially with a new CEO at the helm.

37. Reality_Check

Posts: 277; Member since: Aug 15, 2013

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

45. Timmehor

Posts: 599; Member since: Mar 09, 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!

9. Cod3rror

Posts: 142; Member since: Apr 06, 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.

11. 14545

Posts: 1835; Member since: Nov 22, 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.

13. UrbanPhantom

Posts: 949; Member since: Oct 30, 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...

18. 14545

Posts: 1835; Member since: Nov 22, 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.

20. juandante

Posts: 679; Member since: Apr 23, 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.

23. 14545

Posts: 1835; Member since: Nov 22, 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.

42. microsoftnokiawin

Posts: 1268; Member since: Mar 30, 2012

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

19. 14545

Posts: 1835; Member since: Nov 22, 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.

30. -box-

Posts: 3991; Member since: Jan 04, 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.

31. 14545

Posts: 1835; Member since: Nov 22, 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.

12. Whateverman

Posts: 3295; Member since: May 17, 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.

15. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Nokia fan'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.

16. Commentator

Posts: 3723; Member since: Aug 16, 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?

21. juandante

Posts: 679; Member since: Apr 23, 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

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