Bonnie Cha

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Microsoft Deal Could Mean End of the Road for Nokia-Branded Smartphones

Nokia was once nearly synonymous with cellular phones, but there could soon be a day where its name is not found on any new devices.

As part of Microsoft’s $7.17 billion deal, Nokia is selling essentially its entire phone business. As for the Nokia name, it’s a little more complicated.

ballmer_elop_phones

In general, it stays with what remains of the Finnish company — an entity that will be in the network equipment, mapping and patent businesses.

Microsoft gets limited rights to use the Nokia name, primarily in the low-end mobile phones that are based on the older S30 and S40 operating systems. There it can use Nokia’s brand for 10 years. But when it comes to smartphones, Microsoft only has the right to use the Nokia name on Windows Phones that are in the market when the deal closes.

Nokia could also use the Nokia brand on phones itself, but not for a while. Under the terms of the deal, Nokia can’t reenter the phone business until after Dec. 31, 2015.

Microsoft gets broader rights to the Lumia and Asha brands, which it can use as it sees fit going forward.

For Nokia, it’s a sad end for a company whose name used to be associated with some of the most cutting-edge and advanced handsets. The Nokia 5110, Nokia 9300 Communicator, Nokia 7280 “lipstick phone” and Nokia N95 were just a few of the iconic phones from the company’s past. Then Apple and Google entered the picture, and Nokia soon trailed behind the competition.

In 2007, Nokia’s share in the smartphone market was 49.4 percent. In fall 2012, it was down to 4.3 percent.

While the merits of the deal will surely continue to be debated for some time, it shouldn’t have much of an impact on consumers — for now. Nokia and Microsoft will continue to be close partners, and will work to fill the gap between Windows Phone and iOS and Android.

“For me, it’s business as usual,” said Kevin Shields, a Nokia executive who knows both companies well, having also spent years working for Microsoft. “We’ve got to get the deal approved and closed.”

Ina Fried contributed to this report.

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