Microsoft has agreed a deal to buy Nokia's mobile phone business for 5.4bn euros ($7.2bn; £4.6bn).
The purchase is set, according to BBC, to be completed 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.
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".
Nokia will also license its patents and mapping services to Microsoft. Microsoft has also agreed a 10-year licensing arrangement with Nokia to use the Nokia brand on current mobile phone products.