Nokia Sells Microsoft Its Handset Business, And Possibly A New CEO

Nokia has sold its main handset business to Microsoft for $7.2 billion, but it may be giving the software giant something even bigger.

The deal will send Nokia’s Canadian boss, Stephen Elop, to Microsoft to serve as head of its mobile devices business.

But many industry insiders believe Elop is really being acquired to take over for retiring Microsoft CEO Steve Ballmer, who has faltered in his attempt to compete with Apple for handheld gadgets.

But Nokia also struggled under Stephen Elop. In three years with him at the helm, the company saw its market share eaten away by Apple and Samsung. He also made the controversial decision in 2011 to use Microsoft’s Windows Phone for smartphones rather than Nokia’s own software.

Speaking to reporters this week, Elop said the Nokia sale to Microsoft is for the best.

“It’s very clear to me that rationally this is the right step going forward,” Elop told reporters, though he added, “I feel sadness because inevitably we are changing Nokia and what it stands for,” he said.

On late Monday, Microsoft and Nokia notified 32,000 Nokia employees that they would now be joining Microsoft. The all-cash deal is meant to make Nokia’s unit into a key part of mobile technology efforts at Microsoft.

“This agreement is really a bold step into the future for Microsoft,” Ballmer said in a telephone interview from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.”

While the deal could mark a new direction for Microsoft and potentially bring a CEO, it marks the end of a sad chapter for Nokia. The company that started 150 years ago as a maker of rubber boots and car tires grew into the world’s largest cell phone manufacturer by the 1980s.

Even as recently as three years ago, Nokia had 64 percent of the smartphone market in China, but by early this year the market share had fallen to 1 percent.