Nokia will also license¹ its patents and mapping services to Microsoft.

 

The companies said that the deal would be finalised in early 2014, when about 32,000 Nokia employees will transfer to Microsoft.

 

While Nokia has struggled against competition from Samsung and Apple, Microsoft has been criticised for being slow into the mobile market.

 

"It's a bold step into the future - a win-win for employees, shareholders² and consumers of both companies," Steve Ballmer, chief executive of Microsoft, said in a statement.

 

The transaction is subject to approval by Nokia shareholders and regulators.

 

 

Microsoft, one of the biggest names in the technology sector³, has struggled as consumers have shunned⁴ traditional PCs and laptops in favour of smartphones and tablet PCs.

 

Critics say the firm has been too slow to respond to the booming market for mobile devices. It launched its Surface tablet PCs last year, but sales of the devices have been relatively⁵ slow.

 

Analysts⁷ said that the company wanted to make sure that it got its strategy right in the mobile phone market. 

 

"Mobile is an area of tremendous potential but it has been one of weakness for Microsoft," Manoj Menon, managing director of consulting firm Frost & Sullivan, told the BBC.

 

"Clearly the number one priority for the company is to get its mobile strategy right. From a strategy point of view, this deal is the perfect step, The only question is how well they can execute this plan."

 

Ben Wood, an analyst⁶ at telecoms consultancy CCS Insight, said: "It's a necessary gamble by Microsoft to break into mobile, but given its complete reliance on Nokia for Windows Phone devices and the competitive position of Apple and Google with rival phone platforms an understandable move. 

 

"It completely reshapes Microsoft's business pushing it firmly into hardware. But it also raises big questions about the sustainability of other firms, including HTC and Blackberry, remaining pure-play phone makers," he added.

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