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Microsoft for patent pooling? Buys Nokia for Eur 5.44 billion

Published by Steinar Kvam .

Microsoft for patent pooling? Buys Nokia for Eur 5.44 billion
By: Steinar Kvam
Microsoft has just recently announced its purchase of all relevant mobile-related parts of and license patents from Nokia for about €5.44 billion, whereas 1.65 billion are for the patents alone. My conclusion, as elsewhere on this blog is that the patents are probably where the money is. The biggest impact is of course Nokia’s favored patent portfolio, which was already wielded as a weapon against eg. their Android rivals in addition to Microsoft’s treasure trove of license agreements

Is this going to be good thing for Microsoft? I am not convinced. It may be a relatively cheap acquisition, but what good is it, unless they actually make some money? Nokia got the better end of this deal in that the shareholders got some value and got out. I see this going the way of Palm, truthfully - once it stops making money, it will be dashed to the side and the patents will be too expensive to purchase. 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. Much has already been said (and will continue to be said) about the specifics of the deal, but it's interesting to think about how this purchase will effect Google and the numerous manufacturers of Android handsets. In terms of market share, Nokia absolutely dominates the Windows Phone.

On the other hand it could easily as well be a very lucrative deal for Microsoft. They are getting a hold of extremely prosperous technology for a bargain amount of money. Mictosoft will have an option to convert 10 year license to a perpetual license, Microsoft is acquiring over 8,500 design patents and in addition is acquiring more than 60 patents with third parties e.g. Qualcomm. They are licensing 30,000 utility patents and patent applications. They will have a 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.

For the €5.44 billio purchase Microsoft is getting a whole lot of technology. With a streamlined production process, access to Nokia’s rich portfolio of patents and combined with Microsoft’s market this new formation should rival Apple and Samsung—and that’s exactly Microsoft’s goal.

Knut J. Egelie