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Microsoft is buying substantialy all of the Nokia Corporation, the companies announced today. Microsoft will draw upon its overseas cash resources to fund the transaction.

Microsoft is spending $7.17 billion to acquire Nokia’s devices and services business and license the company’s mapping services, a move that CEO Steve Ballmer characterizes as “a bold step into the future.”

Following the transaction, Nokia plans to focus on its three established businesses, each of which is a leader in enabling mobility in its respective market segment: NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing.

Under the terms of the agreement, Microsoft will acquire substantially all of Nokia’s Devices and Services business, including the Mobile Phones and Smart Devices units, the design team, production facilities, 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.

Microsoft also announced that it has selected Finland as the home for a new data center that will serve Microsoft consumers in Europe. The company said it would invest more than a quarter-billion dollars in capital and operation of the new data center over the next few years, with the potential for further expansion over time.
Juniper Research estimates Nokia’s smartphone shipment market share to be 6% in 2013.

Juniper Research estimates Nokia’s smartphone shipment market share to be 6% in 2013.

Nokia still has the lead in feature phones, although smartphones are the obvious platform of the future.

Stephen Elop will step aside as CEO of Nokia and return to Microsoft as head of its devices team. This is on the heels of the recent announcement that Steve Ballmer would step down as Microsoft CEO within the next 12 months. Some speculate that could indicate that Elop could be in the running as Microsoft chief.

Microsoft will still license Windows Phone and Windows RT after the $7.17 billion deal to purchase Nokia, but will anyone take them up on it? Not a chance, says GigaOm’s Kevin Tofel.

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