Ina Fried

Recent Posts by Ina Fried

Barcelona Rendezvous, 50 Nokia Board Meetings Led to Microsoft Deal

Microsoft’s deal to acquire Nokia’s phone business has long been speculated as a possibility. But finding the right deal took dozens of meetings, months of work, and no small amount of creativity, according to the leaders of both companies.

Nokia’s board and its committees alone had more than 50 meetings on the topic, Chairman and CEO Risto Siilasmaa said in a joint interview with Microsoft CEO Steve Ballmer on Monday night.

While Microsoft and Nokia talked frequently as part of their Windows Phone partnership, the recent deal can be traced to a meeting in February at the Mobile World Congress in Barcelona between then-chairman Siilasmaa and Microsoft CEO Steve Ballmer.

Begun under the premise of how the two companies could improve their partnership, talk gradually shifted to whether a combination might make sense.

“We have worked very hard on both sides — and together — in finding out the way to do a transaction,” Siilasmaa told AllThingsD.

While the talks did not follow a linear path, both companies remained committed to being partners, Ballmer said.

“The only question was: ‘What’s the structure of the partnership?'” Ballmer said.

Many scenarios were considered, Ballmer added.

“We had a Plan A, a Plan B, a Plan C,” Ballmer said. “And by the time we were done, we had A, A1, A-Prime, B, C, D, E.”

He continued: “We looked at many many possibilities together, and ultimately took this one, with us buying all of Nokia’s phone business, becoming an innovation partner and customer of Here, and licensing patents from Nokia.”

Much of the tough work, Ballmer said, was in negotiating an arrangement around the mapping business. That business is staying with Nokia, but Microsoft remains a key customer, with the ability to do innovation work on top of Nokia’s platform.

“That was important to us, because we think mapping is an absolutely critical service, as Nokia does, for the modern world,” he said.

One of the other interesting parts is how it was Microsoft that ended up with the low-end mobile phone business. It’s clear why Nokia wouldn’t want to exit the growing smartphone business, but remain in the declining feature phone business. But how it fits with Microsoft is less obvious.

Ballmer acknowledged that Microsoft was less familiar with that business.

“The part of the Nokia business that comes to us in this acquisition, with which we’ve had to do the most learning over the last several months, is the mobile phone business,” he said.

However, Ballmer talked up that unit as a way for Microsoft to better reach the next billion technology customers with both devices and services.

Another significant shift in the talks came a week ago, as Ballmer announced his plans to step down within the next 12 months.

Ballmer said that Siilasmaa and, later, CEO Stephen Elop, got a brief heads-up ahead of Ballmer’s announcement that he planned to step down, with Microsoft reiterating that it wanted to complete the Nokia deal.

Asked whether Elop intends to be a candidate, Ballmer did the answering.

“Our board is going through a private process,” Ballmer said. “We are considering internal and external candidates.”

Under the current plan, Elop — now Nokia’s executive VP of devices and services — is set to be head of Microsoft’s devices business once the Nokia deal closes.

“We’re excited to welcome Stephen back to Microsoft, and our board is excited to run a private process,” Ballmer said.

This is the start of our behind-the-scenes coverage on how the Microsoft-Nokia deal came to be. We plan to have more in the days to come.


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— Gitesh Pandya of comments on the dreadful opening weekend box office numbers for “The Fifth Estate.”