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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

Daniel Rubino
Executive Editor

Daniel Rubino is the Executive Editor of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft here since 2007, back when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, Microsoft Surface, laptops, next-gen computing, and arguing with people on the internet.

200 Comments
  • Microsoft has laid down the gauntlet! It's official....THE MOBILE WAR HAS BEGUN!!!!
  • By the way......FIRST!!!!....LOL
  • Nobody gives a $#!t
  • I give a shit LOL
  • I give multiple shits
  • ROFL
  • I need to take a shit.
  • me too.
  • I peed in my pants...sitting down...on the toilet
  • You pee, with your pants up, on the toilet?
  • No, his shooter is too short
  • OHHHHHH DISSS!
  • I shouted NOoooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo.......!!! :'(
     
  • I give all the shits of the world
  • yes.. let the butthurt flow through you...
  • I don't give two sh*ts that you don't give a sh*t.
  • 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..
  • Remember, the Nokia team will still be there
  • 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...
  • LET THE GAMES BEGIN!!
  • RELEASE THE KRAKEN!
  • Release the Krakia Lumia 1040!!!
  • Apple (Tim Cook) is going to be mad. More patents means more money from android. Lol
  • Hehe! Microsoft doesn't look like it's dying :D
  • You know those free Nokia apps won't be so free any since there are part of the other Nokia.
  • I think they will, depends on merger details.
  • Yeah depends, thou why give it away to your new biggest customers. Either that or the phones cost slightly more
  • The press release says that Microsoft will licence Here. So probably the end user won't have to pay for them.
  • 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.
  • better to wait before declaring anything.
  • 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.
  • Exactly, +1
  • The last time i checked, Office came free on Windows Phone... Why should Here maps be any different then... Just saying
  • 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....
     
  • Cry more
  • Nokia loves us.......don't joke about such things *sniffle*
  • 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
  • So excited!!
  • Does this mean Microsoft owns the rights to Purview?!
  • definitely..
  • F**k Yeah, B**ches
  • http://discovr.smashpop.net/2013/09/03/microsoft-to-acquire-nokia-device... pureview is still owns by Nokia
  • Surface RT2 with Normal build quality, Nokia reliability, and tegra4 with full PC STREAMING PLEASE. chop chop... Go make it.. :-)
  • Wow. Wonder how the market will react?
  • Yeah, it'll be the first thing I'll check in the morning!
  • I should've bought more stocks
  • Me too, tomorrow will be great day to sell.
  • Same.
  • Well, I'll be changing away from Windows phone, for one.
  • You should get a blackberry... ;)
  • LOL
  • LOL
    Touché!
  • Adios!
  • I am checking my Nokia stock now hopefully its worth cashing out
  • $5.34
  • It seems Microsoft got a lot of design patents, what the patents Nokia gets to own from now on?
  • Nokia will be a part of MS. All their patents are now owned by MS.
  • Not all of them. You're wrong there.
  • 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
  • With 8% market share for smartphones, Microsoft is pretty damn far from a monopoly. 
  • Is that 8% officially global market share now or are you again implying US = world?
  • The 8% figure is for Europe and south America i believe. Its much lower in the US.
  • US would dream of a 8% market share with WP 
  • 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..? =[
  • Don't worry, he's a scroogler
  • 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.
  • Apple is now in danger of being brought to obscurity.. WP will surely aim for the second post after annihilating BB..
  • 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.
  • Hmm... This is all still pending approval by the U.S.
  • 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.
  • Also needs EU approval...
  • they will find a stupid reason :)
  • Already approved by the EU
  • I think the US goverment is going to have a hard time stopping MS from buying a Findland corp.
  • ...and international community
  • Surface phone with Nokia durability? :O
  • Take my money and slap my grandma please!!!
  • And surface rt -like internals? :F
  • Hell no. :P
  • I was thinking exactly that.
  • WP just surpassed iOS....
  • 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.
  • marketing isnt the problem, the OS is.  
  • No, awareness is the problem❗ The OS is plenty fine, more than enough, for the average user..
  • So, what exactly is wrong with OS?
  • I think you're the problem... O_O
  • 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.
  • I'd like to know what "offshore cash" really means.
  • 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.
  • Well that's awesome.
  • +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
  • Well, I learned that from dedicating my time reading tech blogs such as WP Central.. Hahahah..
  • Thank u kindly my good 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.
  • Or, tell them who they can buy!
  • In this case I believe "offshore" refers to Nokia's assets being offshore already because Nokia being in Finland is...well...offshore.
  • They're talking about the money that's being paid by MS to Nokia, not Nokia's assets.
  • Can huawei still make an offer? :D
  • Don't jinx it, man.
  • Lol, good one!
  • Technically Yes!
  • lol this guy
  • xD
  • " 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.
  • CORRECTION : 
    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.
     
    Cheers,
    ~G  
  • 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
  • I've been reading your comments and I gotta say something, keep at it brotha
  • lol, this made the deal worth it, imo
  • Oh yes this makes my day... Fans of other OS's can finally get over it now...
  • Your MeeGo apparently doesn't have spell check. Better get a Windows Phone with such bad grammar.
  • Lol❕
  • +1
  • shove wp in ur ass??
  • Cool story bro!
  • Ha Ha Ha!! Nice to see idiots going retarded over this :)
  • Dang man❗... Sounds like you got a ass full of green robots... You got f#@$&d wit no Vaseline..
  • i have been waiting for this moment for a long time the joy of reading android fans crying comments :D
    lol
  • Lol, cry more
  • Wait, are you...are those...you're crying aren't you? Why are you crying...there's no crying in mobile! ;)
  • Are you old enough to shave yet? I'll bet your mom still washes your clothes.
  • I like how even the legal agreements have a touch of metro in the headers and fonts
  • It's the little things that make this all so beautiful
  • 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.
  • The brand names will stay for at least ten years, Nokia would still be the branded 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. 
  • Be careful, you don't want to end up like the Riddler in Batman Forever =P