With the Nokia deal, Microsoft become a juggernaut in patents for smart devices

We’re still going through all the details of the recently announced Nokia acquisition by Microsoft and are getting a clearer understanding of all the implications of the transaction. Needless to say, Microsoft is going to come out ahead of this deal and it will be something for its competitors to take note in the morning.

The biggest impact is of course Nokia’s favored patent portfolio, which was already wielded as a weapon against their Android rivals in addition to Microsoft’s treasure trove of license agreements. But just as interesting, Microsoft sees the deal with Nokia as boon for its OEM business and they are expecting the acquisition to help with OEM opportunity.  

That’s right, as far as we can tell, Microsoft owning Nokia does not mean Samsung or HTC are getting the boot for Windows Phone devices, though it obviously remains to be seen how each company will respond.

The facts and numbers themselves are quite revealing and we’ll list them below for you to ponder:

  • The Microsoft-Nokia deal comes well before 2014 recommitment date
  • Acquisition grows OEM opportunity; Continue existing partnerships
  • Microsoft will use offshore cash with no impact on ability to reduce capital to shareholders
  • Option to convert 10 year license to a perpetual license
  • Microsoft is acquiring over 8,500 design patents; ownership of Lumia and Asha brands
  • Microsoft is acquiring more than 60 patents with third parties e.g. Qualcomm
  • Microsoft is licensing 30,000 utility patents and patent applications
  • 10 year license to use Nokia brand on feature phones
  • Microsoft will have the most cost-effective patent arrangements for smart devices, including deals with: Samsung, Qualcomm, IBM, Motorola Mobility, Motorola Solutions, LG, Nortel, and Kodak
  • Phone device R&D remains centered in Finland
  • Nokia sales team intact
  • Acquisition approval in EU, US, China, India, Brazil, Russia, Canada and others

In essence, Microsoft is getting a whole lot for the $7.1 billion dollar purchase. With a streamlined production process, access to Nokia’s rich portfolio of patents and combined with Microsoft’s market might, this new formation should rival Apple and Samsung—and that’s exactly Microsoft’s goal.

Of course the counter argument would be that Microsoft was already getting a lot of that with the previous Nokia agreement. But this purchase guarantees that Nokia won't slip out of their hands--in layman terms, Nokia became too valuable for Microsoft to gamble over.

Source: Microsoft Slide Deck


Reader comments

With the Nokia deal, Microsoft become a juggernaut in patents for smart devices


I somehow feel that MS will botch it... MS always F***s Up things... their Marketing is poor at best... MS have been holding up WP while Nokia had been leading the charge...
Its good for WP as it means that MS is searious... but i still feel not searious enough...
take 900 million write-off for Surface as an example... Botched xBox One launch is another..

Not always, they just don't ever do things to your liking and its basically public opinion not fact. So one or two things aren't ever perfect, nothing is...*ahem* "Get over it..."

Those two things are the recent ones... There are many others in the past... Zune, Kin to name a few...
apart from xbox 360, they have not been successful in any consumer products... EVen 360 had its moments.. RROD..

Windows XP was a successful consumer product, as with their keyboard and mice (a billion dollar business few talk about).  If success is defined by revenue, then Zune and Kin are the exception, not the norm, in terms of historically successful Microsoft products.

I tend to agree. Microsoft comes up with incredible ideas, and implementations better than anyone else, but somehow always manage to screw up glaringly obvious details. Look at Windows Phone, arguably the best mobile OS out there, but no rotation lock, no proper way to shut down apps, no unified notifications. And the problem here is that this is stuff users inevitably notice.

The flip side, however, is that Microsoft has gotten a lot of flak they don't deserve. People continue to harp on the Windows 95-98 eras and forget that the internet and computer technology back then was rapidly evolving. Microsoft was trying to do things that are common place today but which the technology arguably wasn't quite ready for back then.

Even OS9 was crap, and the early versions os OSX weren't much better. Microsoft introduced a lot of innovation in standardization that enabled much of what we've seen today. They also took many risks, like introducing tablets well before Apple, which went unappreciated and worse, unfairly bit them in the ass. Some of that goes back to the aforementioned problem Microsoft has of overlooking important details, but really public perception towards Microsoft is totally unfair. On the other hand, Apple has been deified and Apple devotees consistently overlook the numerous flaws of their own devices.

what MS fucks up? For me Windows 8 is the best SO ever.. Xbox the best console.. Surface the best tablet.. i can continue talking about skydrive.. office... outlook... xbox music and video of course.. windows phone 8...

You know those free Nokia apps won't be so free any since there are part of the other Nokia.

Yeah depends, thou why give it away to your new biggest customers. Either that or the phones cost slightly more

Still doesnt mean free. Like windows 8  ms office doesn't come free. but you kinda get what i  mean. I think i'm being a pessimist.

I think Microsoft would continue to offer them free and bundle them on the phones as it gives them the ability to day that their mapping software etc is better than the competition. Ios has tomtom which is much better than the ios mapping, but its an extra £70 so you wouldn't buy an iphone in order to have it, but you would consider buying a windows phone in order to have here drive.

And the apps that are part of the deal will be stuffed full of damn Microsoft adverts like their Win8 and WP Bing apps are, you can forget about add free apps from Microsoft, yet they claim they are not an add company like google....

Microsoft has "what amounts to ownership of the HERE Apps". Microsoft will be paying for use of the data behind the apps, but I am sure they will not be charging for the apps on the Lumia devices, at least.

I think they will be free for atleast another year or so. They could stay free for Lumia's and charge for Nokia/Microsoft branded phones

Surface RT2 with Normal build quality, Nokia reliability, and tegra4 with full PC STREAMING PLEASE. chop chop... Go make it.. :-)

Microsoft purchased the Mobile Division of Nokia & the entire portfolio that comes with the mobile part of Nokia. Other partnerships or divisions of Nokia such as Zeiss, Here and a lot of other side deals are not owned by Microsoft

Actually its pretty clear in the article. MS acquired all of the design patents and is licensing the utility patents, whether they are for mobile or not.

Why are people excited when a big corporation becomes even bigger? Someone give me a viewpoint on it, cuz I'm curious. I think it's just going to lead to a monopoly

We are the world, we are the children...we are the ones to make a brighter day so lets start giving. Why are we all so beholden to drawing lines in the sand, we are all one people..? =[

How the hell is this going to be a monopoly? Nokia and Microsoft are so far behind in the smartphone war they are far from being a monopoly. Now if google bought them, that would be a different story. You have no idea what a monopoly looks like.

Give NOK/MS a few years, and it will increase bec of the trove of patents and R&D that the two companies now share. WP's future looks blindingly bright!

I'm no businessman, but I guess it lowers cost and increases profit. Also, one part of the company can pickup the slack for another part should it became needed. And in this case, I guess it'll help the ecosystem grow. I understand your point though, something like the WalMart and local store senerios.

The only way for it to become a Monopoly is for MS to become the only player in the game and thats not whats happening here. MS ensured they have a stronger more secure position in the mobile device/OEM arena. Google & Apple would have to go belly up for your concerns to become a reality, so have no fear.

I wouldn't say that...I think it's in Microsoft's best interest to help Apple and fight alongside them against Google. =[

Don't write off Apple just yet. My bet is that they will do something equally surprising and game changing. Apple is swimming in cash too.

What exactly would be reasons for prohibiting this deal from going through? There is absolutely no risk in this harming the market ina negative way. Allowing this deal actually creates more competition like never before.

I think the US goverment is going to have a hard time stopping MS from buying a Findland corp.

One year from now we'll still be in the same boat in terms of market share in the US. Apple had nothing to worry about as long of Microsoft continues with the same marketing team. They wouldn't even be able to sell the iPhone.

They have Nokia sales team intact - so I am sure they will push sales like they did before. Also, now they have more cash from daddy Microsoft to spend on grand campaigns.

I think marketing is finally working, many people recognize my wife's white 1020.  White hump with a black lens cover probably helps.
First time since we used lumia's that people outside gadget enthsiasts notice.

it's the amount of cash MS is hiding overseas so that the US government will not be able to audit it. By using those funds in buying Nokia, the American government will not be able to put huge taxes on it.

+1 Kind of dirtbag move by companies, BUT, if MS didn't have that offshore cash, it'd be a problem for investors...f'in capitalism, man

Yep, welcome to international corperatism. It's how the world is run, and any company not doing it is putting themselves at a disadvantage.

Many large companies (like apple, who keeps most of its $100+ billion offshore to avoid paying taxes and continue to enslave children in their death factories) and wealthy individuals keep much of their cash in offshore accounts for a variety of reasons, including regulartory oversight, taxes, and keeping cash flows secretive; heck, even the government keeps some of its money offshore to protect it in case of something happening to the dollar or other fi. Most of apple's $100+ billion is kept offshore so they don't have to pay taxes on it and they can keep children enslaved to make their crummy products.

In this case I believe "offshore" refers to Nokia's assets being offshore already because Nokia being in Finland is...well...offshore.

" nokia branding for feature phones" does that mean Microsoft can't use the Nokia brand on future smartphones?

No it means that all the feature phones that "Microsoft" makes for the next ten years will still say Nokia on them instead of "Microsoft"

They can use the Nokia brand for 10 years. Or at least that's what I've pulled from a bunch of the articles. So much news, so fast. This is huge. I didn't expect to end my day this way.

But the agreements state that the Nokia brand will be used for feature phones..i guess we l be seeing Microsoft lumia's in the near future..and yup lot of news to process...

Yes, that caught my eye too: why does it say they've licensed the Nokia name for "feature" phones for 10 years but say nothing of smartphones. Can they not put the Nokia name on smartphones?

Their Asha phones will continue to say Nokia while I imagine the smartphones will just have the Lumia branding.

Microsoft is acquiring 30,000 utility patents and patent applications
Microsoft is actually *licensing* those utility patents.
Daniel, if you happen to read this - please correct the above.


Fuck u microshit .......fuck u elop ........u killed symbian n MeeGo for the shittiest WP ..........fffffffffkk uuuuuuuuu
die MS die

You must have been one of those android users lusting over a Nokia phone powered by android. Lol jahahhahahahahahahahah

Your MeeGo apparently doesn't have spell check. Better get a Windows Phone with such bad grammar.

i have been waiting for this moment for a long time the joy of reading android fans crying comments :D

The last sentence in the article says it all, imo. Good move by MS, even though I think we all saw it coming.

It was getting to the point where Microsoft needed Nokia more than Nokia needing Microsoft. Smart move all the way around. Never underestimate Microsoft. They are some very smart people. Now it comes down to execution and timeliness.

I just have too many questions! What happens to these nokia priority stores we have here in India? And so msft will continue to use their brand name on Asha series for another 10years? Nokia as a smartphone brand name dead? Doesn't that create a confusion, Microsoft Lumia and Nokia Asha when someone walks into a store?

p.s- I would've loved nokia to be independent.Personally i feel this is a wrong move just when Nokia was establishing its "Nokia Lumia" brand name.

Nokia brand will be used for phones, so you need not worry about that. And Nokia would have been dead if they didn't get bought out, so this decision makes sense.

The article clearly says that the brand Nokia will only be used on FEATURE PHONES for another 10 years, not on the Lumia series of smartphones.

I am right there with you on the Nokia being independent in the Devices market. But this is going to happen and nothing can be done about it.
Regarding your queries, I am only guessing but probably the Priority Stores will remain with minimal changes in name. The Asha line will continue to be called Nokia Asha or Asha by Nokia, for the next 10 years atleast. I am hoping MS does not rename the Lumia series to Microsoft Lumia, with will probably go ahead as simply Lumia (I hope so).
Another factor that you havent still considered, but I have, is that with such a detailed sale and services network already established in India, MS will probaly finally release the Surface line for Tablets/Ultrabooks here. 

MS bought Skype two years ago and the name hasn't changed. It's all about brand recognition. I think a Nokia Surface Pro would be a great brand combination.

How wants to bet Microsoft sells the feature phone business to a Chinese company in the next two years? They'll keep the smartphone business because that the one they only need.

Naugh, they will keep it so when the feature phone users upgrade to a smartphone, which most will eventually they will keep their brand loyalty and go with wp

Hmmm... Is/was this the reason Google is/was giving Microsoft hell for Youtube and all the other BS?? It sorta makes sense. It's almost like Google knew this was about to happen and started concocting pre-emptive attacks on WP. Wow.

Google has pretty much been preemptively attacking WP since it was released. No prescience required for them to be total dicks afraid of any competition.

With Microsoft Surface products never being released in Tier-3 and below markets around the world, I fear that future Windows Phones and Accessories will never see the light of day in these markets as well. Microsoft, if you are reading this, then please ensure that both your device and all the accessories including the premium one's get launched in countries like India with no more than 3 months of waiting time.

I think you're looking at this the wrong way... MS will not contract device availability... they can now expand it.

They just bought Nokias carrier contacts dude, more Microsoft everywhere for everyone. LTE enabled Surface Pros for everyone.

I know the 1020 just came out, but I'm hoping for an updated model with a bigger screen (4.7-5.0 inches), 1080p, improved camera, quad core, and more. Or a smaller version of the 1520 or whatever, but still having 1080p, quad core, and a great camera.

I'm fully expecting a device with specs like this coming to AT&T this fall. As I understand the rumored features of GDR3, that's exactly what they plan to do.

I think the "Nokia brand for 10years" is SO much more valuable short term for Microsoft than all the patents in long term. Im kicking myself for not buying more into Nokia. Such a good day to sell! Market will react so unexpectedly in an expected way. All good news for Microsoft. But RIP my beloved Nokia, you fought, you fought like a lion.

Okay! everythings fine but here is a question will the lumia and asha phones still have Nokia brand name? coz I think if that brand name is gone than no one will buy windows phone or asha. May I get clear on this question Plz Explain?

Wait a minute... 10 year licence to use Nokia's name on feature phones? What about smartphones and tablets? Do they have a different licencing arrangement?

I hope MS won't destroy Nokia I love it as a company since day 1 I love windows phone (Lumia brand) and hope MS will be able to make devices like the 1020 and still attract the customer

There will still be a Nokia, they only bought the devices...Nokia will be taking google to task in auto and maps. ;)

Yea i got that but the devices is what I am afraid of also it wouldn't feel right owning a Microsoft branded smartphone runing Nokia's HERE maps :S but I still hope for the best

When Windows Phone 8 launched, there was details of a purported "Surface Phone" that surfaced, anyone remember that?
Also, recent news of Windows Phone 8 and Windows RT merging.
And the 6' Nokia "Bandit" phone that's been supposedly leaked recently.
NOW, does anyone else feel like there's a Surface-esque type phone that will feature Windows 8/RT capabilities, in a phone factor? I mean, it only all adds up at this point.
If Microsoft/Nokia releases a phone with a nice 4.5 - 6 Inch display, quad-core processor, multiple gigs of RAM, a 1080P screen, a killer Nokia camera and the ability to not only RUN Windows, but also the power to process actual windows-based programs. Just imagine for a second the possibilities.

I am shocked at the suddenness of this deal. It doesn't surprise me, but I didn't think that it would happen until after Steve was replaced. Now, I really wouldn't be surprised at all if elop takes steve's place.

Is this going to be good thing for Microsoft, I'm not sure if it will help the devices division. But this is the shakeup that wall street is looking for. Microsoft gains an immense patent portfolio with the deal. So I suspect that this is also a play for royalties. I guess I'm going to be watching a lot of cnbc tomorrow since 3 companies that I have stock in just announced major deals. Verizon is buying the rest of wireless fro Vodafone, twc and CBS finally made all nice nice, and now this.

Good morning, Daniel
According to the official statement from Nokia: Nokia will licence its patents and they will remain within the Nokia Group. Basically the headlines of the news this morning got it wrong. What is really sold is only D&S, the rest including patents will only be licenced.

Nokia's CTO (Chief Technology Office) organization and patent portfolio will remain within the Nokia Group. - See more at: http://press.nokia.com/2013/09/03/nokia-to-sell-devices-services-busines...

Your link states micvrosoft did by some patents. Like those ralting to there Here services. so basically as long as microsoft lets nokia use the patents from the Here apps Microsoft can use the other patents like the gsm patents.

I'm both a MS and Nokia fan, but I'm not sure this move was the best thing to happen. Nokia's stock was already recovering without the need for MS money. What will happen to the Nokia brand after 10 years?

Will this make Nokia windows phones cheaper? I mean, if MS owns the Devices part of Nokia, is it safe to assume that there won't be a license fee involved?

Who gets the pureview technology? IS that part of devices and services or is that part of the advance technologies division?

I don't like this aquisition. As I stated in other articles, Microsoft is spread too thin, their too large to be efficient, and their exec and marketing staff are clowns.  I don't want that blob to taint Nokia.  They have been a Godsend to WP in every way.

Okay here is a question. Will Lumia devices still get Exclusive apps? I dont think it makes sense now since Microsoft owns it and all apps should be shared within the platform as far as they come effort put in by Microsoft itself.

You never know maybe they will be more like android google offering maps and rest of apps while another company (HTC,Samsung,LG) is making the actual phone

You never know maybe they will be more like android google offering maps and rest of apps while another company (HTC,Samsung,LG) is making the actual phone


MS acquires partnership with Nokia > Nokia takes charge of over 75% of WP > Ballmer exits MS > Elop becomes CEO = WATCH OUT!... birth of Lumia Surface Phone to compete with Android and iOS is imminent!.. HERE. WE. GO.

This whole deal is so bad... so bad. It leaves so few product placement options, alienates other Windows Phone manufacturers, generates no economies of scale for components purchasing and ignores any brand values. How much experience does MS have with making and selling mobile devices? Surface, Surface Pro? That is not a success story. It would have made so much more sense if MS would have partnered up with a mobile device manufacturer that has actually made some good devices in the past 3 years. Nokia, what have they done? What? Yes they put in some nice camera in the 808, 925 and 1020... but none of these devices has a nice "WOW" build quality. How will this end? I fear that in the end MS will be stuck with a lot of patents and not making any mobile devices as too many people simply will not buy a Microsoft product. I see no clear strategy, no vision, no moves to create a team of manufacturers to take on the Android manufacturers. Ok, we might get a Surface phone, we might get this, we might get that... But all sold under the Microsoft brand name. That might work in the US, but just think for a second... Do you believe that people in Russia and Europe will buy MS Smartphones, knowing that MS kind of killed Nokia to do them? It would have made so much more sense if MS would buy the Nokia mobile phone division, then merge it with the Windows Phone division of HTC, as to benefit from the Nokia and HTC brand names. Then you can jointly develop the products and depending on the market sell them as Nokia or HTC products, depending on how the brand is viewed in each market. You jointly buy components and save millions, you use the same LCD, AMOLED displays, let HTC make some money with Android, but get HTC to also make top of the line Windows Phone products. You then can serve both the MS Lumias and the HTC WPs with all the software you need. Like it is now, they are having a party in S.Korea at the Samsung HQ... Frankly, Samsung could simply bid higher for Nokia than MS... 7 Billion is not enough, Huawei, Samsung, LG could all come with higher bids. Some say in three years MS might have to write down the purchase price... very well possible.

I'm not being negative just to rain on WP's parade. I'm telling you that if Microsoft doesn't get things right, they won't sell their product. I said way back when mango came out that Microsoft is still one year being the competition and I was right. I want this platform to succeed but we have to point out the negatives and make sure Microsoft reads them that way they can fix them. We can't act like everything is fine and not complain. Microsoft needs to hear from its own fans that stuff is missing something must be done.

Just me, but I say strike while its hot, buy BlackBerry too and shore up the bottom.  If you can replace BB devices with WP devices intenerated into business existing BB servers of companies, plus show function with SharePoint, Outlook, PP, and Word.  I think you get real movement. Oh and Elop for the CEO show they are serrious about the mobile move as well.