Microsoft to buy Nokia phones unit

3 September 2013 Last updated at 10:48 ET

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Microsoft chief executive Steve Ballmer: "This is a big bold step forward"

Microsoft has agreed a deal to buy Nokia's mobile phone business for 5.4bn euros ($7.2bn; £4.6bn).

Nokia will also license its patents and mapping services to Microsoft. Nokia shares jumped 35% on the news, whereas Microsoft's fell more than 5%.

The purchase is set to be completed in early 2014, when about 32,000 Nokia employees will transfer to Microsoft.

Nokia has fallen behind rivals Samsung and Apple, while critics say Microsoft has been slow into the mobile market.

Describing the deal as a "big, bold step forward", Microsoft chief executive Steve Ballmer told the BBC that his company was in the process of transforming itself from one that "was known for software and PCs, to a company that focuses on devices and services".

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So who wins and who loses from this deal? Nokia shareholders may be breathing a sigh of relief. Yes, they are only getting $7bn for a business that had a market capitalisation of $150bn in 2007.

But the 40% rise in the share price this morning shows they feel this is a far better outcome than they might have expected after years of decline.

As for Microsoft, it will be a while before we know whether Steve Ballmer's last big gamble as CEO has paid off.

He sees this deal as the final piece in the jigsaw, in his strategy to turn the software company into a devices and services business.

At the Helsinki press conference he talked of beating Blackberry for third place in the mobile phone market - and Microsoft's investors may find that number three is not a very profitable place to be.

For Finland and for Europe as a whole, this must be seen as a sad day. It is hard to remember just how recently Nokia was Europe's technology superstar, with a 40% share of one of the world's fastest growing industries and a proud record of innovation.

"We've done a lot of great work in the two-and-a-half years that we've been in partnership with Nokia, going literally from no phones to 7.4 million smart Windows phones in the last quarter that was reported," he said.

But he admitted: "We have more work to do to expand the range of applications on our product."

Priority move

Microsoft, one of the biggest names in the technology sector, has struggled as consumers have shunned 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 relatively slow.

Analysts 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 analyst 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.

'Tighter integration'

Nokia was once a leader in mobile phones, but the firm's sales fell 24% in the three months to the end of June from a year earlier.

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Nokia through the years

1871: Founded. Spends the next century making tyres, boots and cables.

1987: Launches first phone. The Mobira Cityman weighs almost 1kg.

1992: Sells non-mobile divisions and launches first digital GSM phone, the Nokia 1011.

2000: Stock market value hits 186bn euros. Now worth 11bn euros.

2003: Basic 1100 phone launched. Goes on to sell 250 million units and become the world's most popular consumer electronic device.

2011: Abandons Symbian mobile phone operating software and switches to the Windows platform instead.

2013: Launches the Lumia 1020 boasting a 41 megapixel camera.

Source: Reuters/Nokia

It sold 53.7 million mobile phones during the quarter, down 27% on last year.

However, sales of its new Lumia phones, which run a Microsoft operating system, rose during the period.

Mr Menon said that the deal between the two companies would help to bring the "hardware closer to the operating system and achieve a tighter integration".

"This should help Microsoft make a more effective strategy to compete in the mobile sphere," he said.

Microsoft has also agreed a 10-year licensing arrangement with Nokia to use the Nokia brand on current mobile phone products.

Management changes

Nokia also announced changes to its leadership team as a result of the sale. Stephen Elop will step down as president and chief executive of Nokia Corporation and resign from the company's board.

The firm said that he would become the executive vice president of the Devices & Services unit, adding that it expected him to "transfer to Microsoft at the anticipated closing" of the deal.

The transfer of Mr Elop to Microsoft comes at a time when the company is looking for a new chief executive.

The current head of Microsoft, Steve Ballmer, announced last week that he would be retiring and is expected to leave the company within the next 12 months.

Summing up his tenure at the helm of one of the world's largest technology companies, he told the BBC: "I'm pleased with what we've achieved; I'm pleased with the level of innovation we've brought to intelligent devices around the globe.

"But there's always another challenge and with this acquisition we'll take things up to the next level."

Mr Elop who left Microsoft to join Nokia in 2010, has been cited by some as one of the frontrunners to replace Mr Ballmer.

Global mobile phone sales (second quarter 2013)
Manufacturer	Units sold (million)	Market share
Source: Gartner
Samsung	107.5	24.7%
Nokia	60.9	14%
Apple	31.9	7.3%
LG	17	3.9%
ZTE	15.2	3.5%
Others	202.3	46.5%

Nokia's future

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

Nokia says that once the sale is completed, it will concentrate on three key businesses - network equipment manufacturing, mapping and location services, and the development and licensing of technology.

Earlier this year, it agreed to buy Siemens' 50% stake in their joint venture, Nokia Siemens Networks (NSN), which makes telecoms network equipment, for 1.7bn euros.

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Shops and cafes fight US patent trolls

30 August 2013 Last updated at 09:03 ET

The Internet Association is among a group of US trade bodies behind a new campaign calling for politicians to take action over patent trolls.

Patent trolls acquire the rights to inventions and then demand payment to use them while making few if any products of their own.

Shops and restaurants have been targeted for displaying QR codes and online store-locators, say the groups.

The radio and print adverts will appear in 15 US states.

"Patent trolls don't make anything, they just get rich," is a line from the Stop Bad Patents campaign, which claims that businesses can find themselves facing demands for $100,000 (£65,000) to settle - a considerable sum but often cheaper than defending themselves in court.

Its organisers want voters to contact their Congress representatives asking them to "stop bad patents, stop the trolls".

'Legalised extortion'

It is a joint initiative between the Internet Association, the National Restaurant Association, the National Retail Federation and the Food Marketing Institute, all of whom say their members are increasingly being targeted.

"Patent trolls use bad patents to bully companies of all sizes, in every economic sector, from coast to coast," said Michael Beckerman, President of The Internet Association.

"This is essentially legalised extortion, forcing hard-working businesses to go to court or write a cheque."

US President Barack Obama has already called on Congress to tackle the problem of people facing legal action over commonly used technology from others who had own patents to it.

Speaking to the BBC earlier this month, Alan Schoenbaum, general counsel at the cloud computing firm Rackspace, explained that patent trolls are often "entrepreneurs or finance people" rather than genuine inventors of new technology.

"Defending a lawsuit is extremely expensive... they play on that fear that the defendant is going to spend a lot of money to defend itself and it is simply cheaper to pay them off," he said.

However Erich Spangenberg, owner of "patent monetisation" company IP Nav, says the practice of buying patents and asserting that right is already commonplace in other industries.

"Much like an architect can design a building but does not build it, a song-writer can compose a song but doesn't have to sing it, an inventor can get granted a patent and ultimately is not forced to practise it," he responded.

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Vietnam online law comes into force

1 September 2013 Last updated at 07:52 ET

A controversial law banning Vietnamese online users from discussing current affairs has come into effect.

The decree, known as Decree 72, says blogs and social websites should not be used to share news articles, but only personal information.

The law also requires foreign internet companies to keep their local servers inside Vietnam.

It has been criticised by internet companies and human rights groups, as well as the US government.

Vietnam is a one-party communist state and the authorities maintain a tight grip on the media.

Dozens of activists, including bloggers, have been convicted for anti-state activity in the country this year.

The new law specifies that social networking sites such as Twitter and Facebook should only be used "to provide and exchange personal information".

It also prohibits the online publication of material that "opposes" the Vietnamese government or "harms national security".

Last month the US embassy in Hanoi said it was "deeply concerned by the decree's provisions", arguing that "fundamental freedoms apply online just as they do offline".

Reporters Without Borders, a Paris-based group that campaigns for press freedom worldwide, has said the decree will leave Vietnamese people "permanently deprived of the independent and outspoken information that normally circulates in blogs and forums".

The Asia Internet Coalition, an industry group that represents companies including Google and Facebook, said the move would "stifle innovation and discourage businesses from operating in Vietnam".

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Yahoo ceases services in China

2 September 2013 Last updated at 08:01 ET

Yahoo's news and community services have shut down in China, following the closure of its email service last month.

The Yahoo China home page now redirects users to a site run by Alibaba, which manages Yahoo's Chinese operation.

In a farewell message which appears before the redirect, the firm says it is "adjusting its operations strategy".

It also implies that its staff will be working on Alibaba content instead and thanks users for their support.

Yahoo has yet to comment.

The company faces big competition in the Chinese market.

Social media services such as the Twitter-like platform offered by Weibo are hugely popular in China despite being openly censored.

Yahoo has a significant stake in Alibaba, the business-to-business online retailer which has been licensed to run its Chinese services.

Some analysts suggest that Alibaba's own services have benefited from its relationship with Yahoo.

"China Yahoo has been under Alibaba for many years. Its most valuable properties have been dismembered and used," anlayst Li Zhi from Analysys International told IT World.

"Alibaba already has no need for a China Yahoo that's been squeezed dry."

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Full HD tablet and 4K phone revealed

2 September 2013 Last updated at 10:50 ET

LG and Acer are both claiming "world firsts" with their latest product launches, revealed ahead of Berlin's Ifa tech show.

LG is returning to the tablet market with the G Pad, which the company is marketing as the only 8in (20cm)-class device to feature a "full-HD display".

Acer has announced the Liquid S2 , the first smartphone capable of recording video in the 4K "ultra-HD" format.

It allows the companies to get the jump on rivals in what will be a busy week.

Sony, Samsung, Panasonic, Lenovo, Toshiba, Philips and Dyson are among other companies to have scheduled press conferences between 4 and 11 September at the consumer electronics event in the German capital.

1080p screen

The 8.3in G Pad marks LG's return to the sector following its announcement in June 2012 that it was putting "tablet development on the back burner" in order to focus on smartphones.

The company has since improved its standing to become the world's third best-selling smartphone-maker after Samsung and Apple, according to tech analysis firm Gartner.

Its latest figures suggest LG sold 11.5 million handsets in the April-to-July quarter giving it a 5.1% market share.

LG hopes to replicate that success by launching an 8.3in tablet with a display featuring 273 pixels per inch (ppi), which is actually slightly higher than that needed to show 1080p video in full-quality.

The extra resolution should also make text sharper, although it also means the device's processor has to work harder to display all the pixels which will take its toll on battery life.

LG is also promoting the inclusion of its proprietary QPair app which allows the G Pad to be paired with other Android smartphones so that calls or messages can be handled via the tablet.

"LG's recent financial results have looked quite promising when it came to smartphone sales, but I think this particular tablet might struggle to match them for third place in the market," said Jas Badyal, an analyst at telecoms consultancy CCS Insight.

"Along with the iPad Mini and Amazon tablets there's also reports that Tesco plans a tablet of its own, so the firm even faces the worry of the supermarkets getting involved in the future."

Child tablet

Acer's Liquid S2 is able to shoot 4K video thanks to its inclusion of Qualcomm's new Snapdragon 800 processor.

But as the 6in-screen on the Taiwanese company's phone has a lower resolution, owners will need a 4K-television or alternative display to make the most of the format.

The extra processing horsepower does, however, mean that users can film video in 1080p at 60 frames per second allowing them to create a four-times slow-motion effect.

Other devices running off Qualcomm's chip - or alternatively Nvidia's rival Tegra 4 processor, which also supports the ultra-HD standard - may also be announced at Ifa, meaning the Liquid S2's unique status could be short-lived.

French company Archos has also opted to unveil its new devices ahead of the tech show.

Its new line-up includes the 80 Childpad - a tablet featuring an application which takes owners to a special version of Google's Play Store which only features programs that Archos' staff have judged to be suitable for a younger audience.

One industry watcher said the news did not mark a major leap forward.

"We are seeing a sort of steady iterative upgrade process to core components of the smart device experience whether that's around screens, photographic capabilities, audio or so on," Tony Cripps, principal analyst at the tech advisory firm Ovum, told the BBC.

"What we're not seeing is any kind of distinct move into something different in terms of the core user-experience.

"That's one of the reasons the industry is becoming increasingly interested in the idea of smartwatches and other accessories - that's where the more obvious differentiation can be made."

Sony has already announced plans for its Android-compatible SmartWatch 2 but has yet to put the device on sale.

The Korea Times has quoted a Samsung executive as saying the firm would unveil its first Galaxy Gear smartwatch at Ifa, but that the device would not feature the flexible display shown in recent patent documents.

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Remote town launches mobile network

2 September 2013 Last updated at 13:27 ET

The remote Mexican town of Villa Talea de Castro, which has a population of 2,500, now has its own mobile phone network.

Users pay $1.20 (77p) per month for the Red Celular de Talea (RCT) radio network service, with US calls costing a little more, reports AFP.

However calls are limited to five minutes in length so as not to overload the fledgling network.

RCT is a collaboration between not-for-profit groups and the local community.

It runs off a 900mhz radio network and uses computer software that registers phone numbers, routes calls and manages account billing.

RCT volunteer Israel Hernandez said the radio spectrum was "financially unviable" for the country's major telecoms companies, which did not offer services in Talea de Castro.

Some 600 local people have signed up so far, said town official Alejandro Lopez.

The groups hope the project can be more widely adopted in the future.

"Many indigenous communities have shown interest in participating in this project and we hope that many more can join this scheme," they said in a joint statement.

Counting the cost

Informa telecoms analyst Mark Newman told the BBC the scheme may have been able to keep costs down because officially it is a two-year pilot.

"There are a number of reasons why it's usually expensive to make calls," he said.

"Often the government will sell the spectrum for a lot of money. You might pay millions of dollars to use the radio spectrum. The question is will the government eventually start taxing them for it?"

Mr Newman added that their willingness to install the necessary infrastructure could also be reflected in the apparently low price of running RCT.

"Generally, when you look at the cost of building a network, a large part of the cost is acquiring the sites to put your radio masts and the cost of digging up the road," he said.

"Those civil works are very expensive. If you are a village or town and you welcome the arrival of a mobile phone operator it might well be the council says, 'Of course you can put masts up on our municipal buildings, in our parks.' Then you are massively lowering the costs of rolling out that network."

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Vodafone sells $130bn Verizon stake

2 September 2013 Last updated at 16:27 ET

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Vodafone CEO Vittorio Colao: "We got an offer that we thought was in the interests of our shareholders"

Vodafone has sold its 45% stake in Verizon Wireless to US telecoms group Verizon Communications in one of the biggest deals in corporate history.

The $130bn (£84bn) deal was announced by Vodafone after the close of trading on the London Stock Exchange.

The company will return £54bn to its shareholders, of which £22bn will go to shareholders in the UK.

Vodafone will also invest money in its business, with funds earmarked for high speed mobile phone networks.

It said that by 2017 its main five European markets would have almost complete 4G coverage.

'Project spring'

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"Start Quote

Possibly it would be wrong to carp and wring hands that Vodafone won't be paying a penny of tax to the British taxman"

End Quote

Vodafone chief executive Vittorio Colao told BBC News: "We got an offer that we thought was in the interests of our shareholders to accept - at the end of the day it's as simple as that."

The company is launching a £6bn investment plan called Project Spring, which will accelerate the introduction of 4G networks and increase investment in laying fibre optic cables, among other things.

The investments would allow the company to offer much faster broadband services to customers.

Project Spring will also add to Vodafone's high street stores and develop mobile payment services.

Analysts said that the funds would also allow Vodafone to invest in Europe.

"I think Vodafone has looked at its European market and decided it needs to consolidate its business in a number of countries by buying up broadband and cable TV assets to go with its mobile businesses," said Mark Newman, telecoms analyst at consultancy Informa.

It is the third biggest corporate transaction, behind Vodafone's 1999 deal to buy Germany's Mannesmann and AOL's purchase of Time Warner in 2000.

Despite the huge size of the deal, it will not generate tax revenue for the UK.

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Vodafone shareholder Stan Grierson says he will reinvest his additional dividend

Vodafone says that as the US business is owned by a Dutch holding company, it will not be liable for tax.

However, it will pay $5bn in tax in the United States.

Not paying any tax on the deal may be controversial.

"Everybody is entitled to his or her opinion... but we don't deal with opinions, we deal with rules, and with standard rules and practices and tax practices from any jurisdiction where we operate," Mr Colao said.

"This jurisdiction is the Dutch one but even the UK one has very similar rules - we apply the rules."

Although the deal will not give the UK a direct tax windfall, it could provide a boost for the UK economy in a number of ways.

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How Vodafone and Verizon stack up

Vodafone:

• Founded in 1985 in Newbury, Berkshire. Now has its headquarters in London
• Among the four biggest companies listed on the London Stock Exchange with a market capitalisation of £92bn
• One of the biggest telecoms companies in the world
• Operates in 30 countries, partners with other networks in 50 more
• Serves more than 403 million customers

Verizon Communications:

• Launched in 1983 in Philadelphia as Bell Atlantic
• Market capitalisation of $133bn (£86bn)
• Operates the largest 4G wireless network in the United States.
• Delivers services to customers in more than 150 countries worldwide
• Founded Verizon Wireless in 2000 as a joint venture with Vodafone.

Vodafone will invest some of the money in developing its business, of which a significant part is in the UK.

Shareholders will receive a payout, which they might choose to spend or invest.

They will also pay tax on the dividends they receive.

BBC Business Editor Robert Peston said: "Possibly it would be wrong to carp and wring hands that Vodafone won't be paying a penny of tax to the British taxman on the tens of billions of pounds of profit it will make from the disposal.

"Because if it had been obliged to pay very substantial tax on the sale, it would have turned down the offer from Verizon Communications - and a windfall for the British economy would have been lost."

Nevertheless, the tax affairs of big companies have been under scrutiny, particularly since it emerged that Google, Starbucks and Amazon had found legal ways to pay relatively little tax on their big operations in the UK.

Margaret Hodge, who questioned executives from those firms as chair of the Public Accounts Committee, told the BBC: "I think we want reassurance that HMRC is doing its darndest to look over this deal in huge detail to make sure that Vodafone, under the existing law, is paying all tax due."

The deal ends a long-running saga, with both Vodafone and Verizon trying to take full control of Verizon Wireless over the years, but having been unable to agree a price.

Vodafone shares rose 3.4% during the day.

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£1m cash pledge for computer museum

3 September 2013 Last updated at 06:24 ET

A technology entrepreneur has pledged to give £1m to The National Museum of Computing (TNMOC) at Bletchley Park.

The offer is the largest ever single donation given to the museum that curates, repairs and stores ageing computers.

The museum said the cash would be used to refurbish the museum to help it handle more visitors and display more of its historic computers.

The cash has been promised by British IT veteran Matt Crotty.

To get the cash TNMOC must also do its own fund-raising as the money has been pledged on a "matching funding" basis. This means that Mr Crotty will match every future donation given until a total of £1m has been reached. TNMOC is now starting a funding drive to secure cash to match the pledge.

"My decision to donate has been motivated by the increasing public awareness of the significance of digital heritage and the role and understanding it can play in inspiring current and future generations to become engineers and computer scientists," said Mr Crotty in a statement.

Tim Reynolds, chairman of the trustees of TNMOC, said the money would help the museum show off many more of its pioneering computers, many of which were currently sitting in storage.

Sited in the grounds of the Bletchley Park wartime code-cracking centre, TNMOC is home to a replica of the Colossus computer as well as many other historical machines including the Witch - a machine that aided scientists working on Britain's atomic programme.

The museum is also co-ordinating work to recreate the Edsac computer that was built at Cambridge University just after World War II and was one of the first widely used by scientists and businesses.

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Man buys tweet to complain about BA

3 September 2013 Last updated at 07:18 ET By Jane Wakefield Technology reporter

In a modern spin on the tale of David and Goliath, a disgruntled customer has found a new way to use social media to take on a big corporation.

Fed up with the way British Airways was handling the issue of his father's lost luggage, businessman Hasan Syed decided to complain about it.

But rather than just put out a normal tweet, he paid to have one promoted.

Using promoted tweets in this way could represent a new trend, experts believe.

Long delay

The promoted tweet bought by Mr Syed reads: "Don't fly @BritishAirways. Their customer service is horrendous."

Promoted tweets are generally bought by advertisers who want to reach a wider audience. The paid-for tweet is given high prominence in the Twitter feed of the relevant company but otherwise acts as a normal message and can be retweeted by others.

Mr Syed purchased his paid-for tweet via Twitter's self-service ad platform for an undisclosed sum. He targeted New York and UK markets with the tweet.

The decision to highlight BA's customer service came following a trip his parents made from Chicago to Paris at the weekend, during which his father lost his luggage.

Six hours after the tweet went live, and was picked up by news website Mashable, it had been read by thousands of Twitter users, retweeted and commented on.

But it took another four hours for British Airways to pick up on it: "Sorry for the delay in responding, our twitter feed is open 09:00-17:00 GMT. Please DM [direct message] your baggage ref and we'll look into this."

The idea that the ad platform of large corporations can be hijacked by members of the public is an interesting trend, thinks Shashank Nigam, chief executive of aviation consultancy SimpliFlying.

"The implications are tremendous for the future of airline customer service, especially on social media," he said in his blog.

"These tools are easy to use and brand detractors have the same access to them as corporations. I'd guess that this cost less than a thousand dollars to buy and Mr Syed targeted it smartly," Mr Nigam told the BBC.

"Airlines are going to have to start having 24/7 customer services and maybe they need to train up call centre reps to respond to messages on Facebook and Twitter."

In this particular case, the tweet appears to have been successful.

"We would like to apologise to the customer for the inconvenience caused. We have been in contact with the customer and the bag is due to be delivered today," British Airways told the BBC.

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Illumiroom 'too expensive' for homes

3 September 2013 Last updated at 10:16 ET

Microsoft has admitted that an ambitious scheme to illuminate the world's living rooms is unlikely to see the light of day any time soon.

Illlumiroom uses a Kinect camera and a projector to extend graphics beyond the screen.

But any hopes to see the project go mass-market have been dashed by a senior Microsoft executive.

Albert Penello, head of product planning for Xbox One, said that it was too expensive to go mainstream.

Speaking to the AusGamers website he said that the concept would remain as "just research" for the foreseeable future.

"It's super-neat if you're in the lab and you've got Microsoft money..

"We looked at it, but for an average customers it's like thousands of dollars [to set up]."

Immersive video

Using a Kinect camera and a projector, Illumiroom aimed to bring computer graphics to life around the whole living room.

Microsoft showed off the project at this year's CES technology show, with developers saying that the system would "change the appearance of the room, and enable entirely new game experiences".

At the time, experts questioned how practical the system was given that few people own a projector.

Some speculated that the system could make it to the next-generation Xbox as some form of add-on, but since January's show, Microsoft has said little about the project.

The idea of immersive video is something that others have experimented with, but few ideas have caught one.

Philips launched Ambilight television sets in 2004 which projected light around the TV to suit the mood of the content being played.

And since 2006 BBC research and development has been working on its own system, described as the visual equivalent of surround sound.

It is using a reverse projection technique that works with standard projections and its own calibration software.

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