Bloomberg: MSFT to Pay $1bn in WP7/Nokia Deal
When Microsoft and Nokia announced a partnership that would see Windows Phone 7 become Nokia's primary smartphone OS, there was a lot of speculation as to whether or not Microsoft had paid for the privilege. Nokia's official line is that the contract has yet to be signed and so they cannot share details until the all the ts have been crossed.
However, today a report from Bloomberg suggests that Redmond did indeed fork out cash for the deal. Bloomberg cites two unnamed individuals with knowledge of the terms in reporting that the agreement will see Microsoft pay Nokia more than $1 billion to promote and develop Windows-based handsets.
An expensive deal for Redmond, for sure, but it's not all one directional. The sources also said that Nokia would pay Microsoft on a per-licence basis and one source said that Microsoft is also gaining the right to use Nokia's patent portfolio.
Additionally, Microsoft will make use of Nokia's Navteq mapping software for a number of different services, such as geolocation and selling ads and coupons to users based on their location. This is a prime example of how the deal will mutually benefit both parties.
Nokia announced its plans to partner with Microsoft in early February, roughly one week after its newly-appointed CEO Stephen Elop sent out a 'burning platform' email promising big changes. The news came as a shock to those who had been following the Espoo, Finland-based company's position on the smartphone market. The company had long criticized competitor's use of Android, and claimed that by using the same OS as everyone else, one ran the risk of diluting their brand and becoming indistinguishable from competition. To turn around and announce that Nokia's primary OS would be one widely available for others to use was quite an about face.
For more on the announcement check out our previous coverage:
1. Nokia and Microsoft Announce Phone Partnership
2. An Open Letter from the CEOs of MSFT and Nokia
Read Bloomberg’s full report on the deal between Nokia and Microsoft here.
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I have been in IT for over 15 years. And this is the first time I can say Microsoft is out of Ideas.
I think it is time to upgrade that linux cert. I can see MS loosing it domanince in the next few years. Although Apple is good maybe great, it is not a networking OS. But it would not take much to change the minds of many admins, after all it is unix.
As for Microsoft, Bill where are you, Ballmer is making MS a comical buzz word.
I still think it was foolish of Nokia to go with Microsoft.
I have been in IT for over 15 years. And this is the first time I can say Microsoft is out of Ideas.I think it is time to upgrade that linux cert. I can see MS loosing it domanince in the next few years. Although Apple is good maybe great, it is not a networking OS. But it would not take much to change the minds of many admins, after all it is unix. As for Microsoft, Bill where are you, Ballmer is making MS a comical buzz word.
For someone who has been in IT for 15 years you are making a hell of a leap from desktop to mobile OS there.
Where exactly do you see it as a bad idea for MS to try and leverage its new mobile OS by tying in an exclusive deal with a firm that a currently still the worlds biggest single provider of mobile phones?
The alternative is this - Nokia continues with fragmented products and an OS that has been almost totally wiped off the map, or tries Android and becomes just another Google phone with a saturated segment and no market differentiation.
The same applies to Microsoft, they continue as an OS provider to several other manufacturers who have already thrown in their lot with Android so again have to work in a saturated segment and no market differentiation.
OK, there is plenty of opportunity for both sides to fail with this deal, but without it failure is guaranteed.
Wow that is a ridiculous amount to pay. What is Microsoft's estimate on how long it will take to recoup that cost?
My point is they are out of idesa. they missed the phone market, they are not leverageing in they are trying to buy there way in.
There was a time when admins alike and people in general could not waite for MS to make a anouncement. Now its just another failure. Unlike many people trying to cool by saying they hate windows or Microsoft. I like them. Windows has it issuem=, but it works. I started out in solaris and saw it fall to windows and now, windows will not fail but, I have to see the writing on the wall. Microsoft is. Again. I said nothing about the phone market, I said they are out of ideas.
I still wonder why Nokia did not buy Palm to get WebOs
Depends on the number of phones they sell. I'd guess about 2 years if it's just phones. But MS will make money on any patents that Nokia has included in the deal, so that will probably be significantly less time.
If MS would only open up the Apps portion of their phone to more devs. Paying a yearly fee to write apps is something to do "after" they have a nice chuck of the market. Cut some deals with Square Enix, EA, etc and get some good games on there.
Google wasn't going to pay them a billion, they needed the cash, M$ needed more good phones. I can see why this happened. (not to mention M$ is a sucker for friends with benefits (patents)
surely the deal will be mutually beneficial to both companies. MS got instant market share, access to Nokia's patents and will recoup the money from each license sold. Nokia got an OS that is not Android. hell freezed over before when MS offered $100M to invest in Apple when Apple was in tougher times.
Yes, Nokia probably would have felt more lonely doing a deal with google, (sleeping lonely vs not sleeping) in a relationship with microsoft...
@jdamon113
yeah nice idea, lets just hand over our corporate cloud control to Apple..... im sure it wont take much to convince them that
Have you even tried WM7, sure it's not a spectacular OS and it might not be as polish as iOS but it's not far off, and im pretty sure MS have already planned for corporate controlled cloud environment, after all it's probably going to plug directly into MS server, just cause it dont sparkle dont mean it's not workable, heck win98 was poooo but it still got adopted via the corporate for a limited time
My point is they are out of idesa. they missed the phone market, they are not leverageing in they are trying to buy there way in.There was a time when admins alike and people in general could not waite for MS to make a anouncement. Now its just another failure. Unlike many people trying to cool by saying they hate windows or Microsoft. I like them. Windows has it issuem=, but it works. I started out in solaris and saw it fall to windows and now, windows will not fail but, I have to see the writing on the wall. Microsoft is. Again. I said nothing about the phone market, I said they are out of ideas.
I don't see how anyone can say this is a bad idea. Just because you've been an IT Tech for 15 years doesn't mean that knowledge carries over to business.
Windows Mobile's problem has always been distribution and getting manufacturers to get the products out there. The platform itself is very good. Once it gets ground it will get even better because as it becomes more and more successful Microsoft will always invest more into it. Nokia is the key. Symbian was/is dead.
The best hardware manufacturer with the best software developer. Nobody said this partnership wasn't a risk. But you can't have rewards without it.
Good point. But again, I said MS is out of ideas. To me this looks like desporation.
Lets face it. A billion dollars, they should be able to build the whole platform for the ground up.
And yes just becasue I have been in IT for 15+ years. I have seen a lot of changes.
What we haven't seen is Microsoft looking desporate. I stand my ground this will fail, Balmer is a idiot. Other than that. I like MS a lot and hope they find they way back.
Hmm, I don't understand why everyone is so hard on Microsoft. They've been coming out with great products (Windows 7, Xbox 360, Zune). Even Microsoft's antivirus software is pretty good actually.
I don't personally own a Windows Phone 7, but I have played around with it a bit. It's very polished and unlike Android, it's guaranteed upgradeable (they'll sort out the problems with the Focus), hardware accelerated (sooooo much smoother than Android), and it has Zune and Xbox functionality built. It seems to me that Microsoft is leveraging their other great consumer products into a very good smart OS. Not too mention that Microsoft owns when it comes to corporations.
FYI, I picked out an Android phone (Galaxy S) for my wife and I currently own an iPhone 3g. I want a Windows Phone 7 next but I want to see newer hardware.
rryan to answer, its not that everyone is hard, or at least this is my take.
when you have Three of the wealthest people in the world because on one company. You all ready know they have money... and yes MS has money. But they are not doing well with it.
They make software, so when they do so it should be great from the start. that is what they do.
They have thousands of developers, this phone thing should be a blink of the eye. But this is what happens when companies forget there roots.
Good point. But again, I said MS is out of ideas. To me this looks like desporation. Lets face it. A billion dollars, they should be able to build the whole platform for the ground up.And yes just becasue I have been in IT for 15+ years. I have seen a lot of changes. What we haven't seen is Microsoft looking desporate. I stand my ground this will fail, Balmer is a idiot. Other than that. I like MS a lot and hope they find they way back.
For someone who has been in IT for 15+ years it seems very odd that you still use a browser with no spell check.
One billion is chicken shit for Nokia which lost about 5 billion value with this whole MS/WP7 strategy change which might be catastrophic for Nokia. M$ is the only one who benefits from this deal which is pretty obvious. Without Nokia deal, WP7 would be buried by iOS, Android and Meego.
well only time will tell, i think my n8 will be the last nokia for me might need to go android. hate the look of windows os on the phones. and the xbox crap you get only make me feel sick. but it can be a good combo
@jdamon113
MS did exactly the same thing with the xbox, went off and brought off a bunch of developers, if it was a desperate move it was one that seem to work. Nokia is a respectable handset maker, they have produced some solid phones (that lacked in the software department), WM7 is not so bad, think of it like windows XP which eventually gave way to windows 7, WM7 will follow suit
15 years in the industry and you didn't think MS bundling a half baked web browser with the win95 plus pack before tying it directly to the OS itself to ensure that user had to use it as desperate, how about the resultant development of ActiveX maybe
MS at least do have a cloud strategy now (and i have to say pretty comprehensive too), they just dont have a strong presences in the low power mobile segment, but i would hazard that they are far from desperate, MS will only fail if they stop developing the platform, otherwise just like windows, WM 7 will evolve over time too, after all IE was abysmal but it still went on to take over 80% of the market share in it's prime (not that you can call anything about IE prime...)
but i'll agree with you on one point, Balmer is an Idiot
Might I just Microsoft has been making some good products of late.
It'll be nice to see what they can do with a dedicated outlet.
@BalmerIsAnIdiot
I can't tell what you're trying to say. You seem to begrudgingly give MS props and then say Balmer is an idiot.
I still think it was foolish of Nokia to go with Microsoft.
nokia was getting desperate...they had no choice...plus google's os is crap
I'm waiting for the MS Tablet in 2012. Before I get flamed... Windows 7 optimized for a tablet with Office optimized for a tablet will leave most competitors behind.
@rhino13
if it makes any difference i think Steve Job is an idiot too
So it looks like MS had to pay big bucks to convince Nokia, I suppose. It's too bad that not more companies can see how great WP7 is - it's smooth, it's unique.