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Nokia getting $1 billion from Microsoft to "promote" Windows Phone and stay away from Android

Posted: , by Daniel P.

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Nokia getting $1 billion from Microsoft to
Two sources with knowledge about the exact terms of the Nokia-Microsoft agreement have informed that the deal included Microsoft paying Nokia over a $1 billion over the course of five years "to promote and develop" the Windows Phone OS on its devices.

Something tells us that this sum has also been used to sweeten the pot for Nokia to avoid Android like the plague, whispering in its ear how Android will make Nokia's handsets a commodity, etc.

Whatever the reason, Ballmer played it well, and basically got a Nokia on its belt for just a $1 billion. Some of it will be paid upfront as soon as this year, so Microsoft will incur some losses before Nokia has started making and selling handsets with Windows Phone, and paying royalties to Redmond. In the long run, though, considering the millions of Nokia Windows Phones expected to be sold, this billion will be offset by the royalties Microsoft stands to gain from the sheer scale of the enterprise.

Microsoft will also be paying Nokia to use its patent portfolio, and tailor the NAVTEQ mapping services (which it uses for Bing Maps anyway) for location-based advertising, coupons, etc., where both companies will split the revenue.

It is good for Nokia too, since it gets some fresh cash from Microsoft, which has plenty, to offset its shrinking operating margins until the transition takes place in the next year or so. Plus it gets to decrease its R&D efforts, which had a budget of more than $4 billion last year, by a third, which is another $1.2 billion in savings.

All in all, sounds like a win-win for both companies, the only wild card is whether the whole collaboration will prove successful, and Nokia Windows Phone will sell in sufficient quantities. The companies are optimistic, and, if this thing takes off, they might as well tie the knot even closer.

Too bad we probably won't see anything substantial from them this year, except plenty of concepts, but we are certain there will be rumors and expectations to keep us warm until we get the first fruit of the Nokia-Microsoft love story in our hands for a review.

source: Bloomberg


13 Comments
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posted on 08 Mar 2011, 02:48 1

1. Droid_X_Doug (Posts: 5954; Member since: 22 Dec 2010)


If Mango gets pushed out to 2012, the $1 Billion may be the most that Nokia sees from the WP7 exercise.

posted on 08 Mar 2011, 02:53 2

2. mogambo (unregistered)


Come on, come on, love me for the money / Come on, come on, listen to the money talk

posted on 08 Mar 2011, 03:35 1

3. SemperFiV12 (Posts: 868; Member since: 09 Nov 2010)


As long as MS doesn't rush and push unpolished products with Nokia... It seems right now only Samsung's Focus, appeals to me - haven't played with an HD 7, but I have no intentions to switch to T mobile. The LG Quantum and the Surround do not impress me much, even though the WP7 OS looks better and better as time progresses.

posted on 08 Mar 2011, 09:40 1

8. jbash (Posts: 342; Member since: 07 Feb 2011)


I would go with an HTC device. They update their software quickly and rarely with a hitch unlike Samsung. Just my $.02

posted on 08 Mar 2011, 05:32

4. cyborg (unregistered)


I hope Nokia will open the closed WP7 ecosystem.

posted on 08 Mar 2011, 07:42 1

5. luis_lopez_351 (Posts: 951; Member since: 18 Nov 2010)


xD the more people get their hands on WP7 the more people will see how "too simple" and boring it is :)

posted on 08 Mar 2011, 07:57 1

6. cc (unregistered)


http://www.apple.com/iphone/

posted on 08 Mar 2011, 21:22 1

11. luis_lopez_351 (Posts: 951; Member since: 18 Nov 2010)


i dont get it??? is that a joke or something xD

posted on 08 Mar 2011, 08:02 1

7. TreyTreyTaylor (Posts: 345; Member since: 21 Dec 2010)


I'm thru with Nokia. Google practically begged them to make android phones. If they would have done this, they undoubtedly would have been one of the top 3 smartphone makers by the end of 2011.They could have made S40 for their low end phones(drop S60 altogether IMO), Android their mid to high end phones, and the beloved Meego phones strictly high end. With them making Windows Phones it's always gonna seem like they gave into defeat. With android it wouldn't have been this way to me. Don't say Mr.Andy Rubin didn't give you a chance.

posted on 08 Mar 2011, 10:50 2

9. MorePhonesThanNeeded (unregistered)


Very weird that Nokia would side with MS in the US. The three largest platforms are Android, iOS and BB. This doesn't sound like a sound business decision to me, but whatever, money upfront is money you can count. Should have had android on lower end phones and at least one top tier phone and make some money because some people just can't get enough of Nokia designed phones.

posted on 09 Mar 2011, 08:46 1

12. corps1089 (Posts: 492; Member since: 20 Jan 2010)


Its about platform ecosystem like Elop said: not about picking the most marketable or installed base OS or hottest selling OS. Nokia is losing marketshare since they do not have a stake in a winning ecosystem and figure that they can best partner with Microsoft to establish one and RETAIN LEVERAGE.

Nokia needed to pick someone desperate in order to gain the best return on investment for what they bring to the table. Microsoft is deparate since they are playing catchup and forked over everything that the Google would not. Nokia thinks that the WP7 ecosystem can improve marketshare with thier influence, and they have a better deal in that ecosystem since Microsoft was desparate to have them. Microsoft got a great partner who brings a lot to the table and will have a tremendous impact on theexpansion of the WP7 ecosystem. Everyone wins including us since we get better phones from WP7 and eveyine else due to competition.

posted on 08 Mar 2011, 19:44 1

10. chinakidoliver.iab (Posts: 75; Member since: 07 Dec 2010)


i never knew os were this competitive..........

posted on 27 Apr 2011, 14:48

13. abass luncoh (unregistered)


I love this progam becos i need to lqne mo about nokia

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