Microsoft is backing the future of the Windows Phone with the acquisition of Nokia’s Devices and Services business, which includes licensing Nokia’s patents and licensing and using Nokia’s mapping services.

Under the terms of the agreement, Microsoft will pay about  $US7.2 billion to purchase substantially all of Nokia’s Devices and Services business and license Nokia’s patents. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.

Microsoft says it aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies and unified branding and marketing with Nokia, building on its partnership with Nokia announced in February 2011.

“It’s a bold step into the future — a win-win for employees, shareholders and consumers of both companies,” Steve Ballmer, Microsoft CEO, said in a statement. “Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services.”

However some analysts doubt Microsoft will ever challenge Apple and Samsung.

“The new company has a long road ahead to establish Windows Phone as a viable competitor to Android and Apple’s iPhone,” Ian Fogg, head of mobile analysis at IHS Electronics & Media, told The Globe and Mail. 

“In the second quarter of 2013, Nokia shipped just 7.4 million Windows Phones compared to 31.2 million iPhones and 185 million Android smartphones. IHS forecasts that unless Microsoft speeds Windows Phone innovation, in 2017, Windows Phone will comprise just 5 per cent of overall smartphone shipments.”