Rumor: Microsoft paid Nokia more than $1 billion to pick Windows Phone over Android

By on March 8, 2011, 12:18 PM
Nokia announced last month that it was switching to Windows Phone as its primary smartphone platform. The two companies have not yet reached a final agreement; that will be signed in the next few months. A new rumor has sprung up, however, suggesting that Microsoft is paying Nokia more than $1 billion as part of the deal, according to "two people with knowledge of the terms" cited by Businessweek:

Nokia will pay Microsoft a fee for each copy of Windows used in its phones, costs that will be offset as Nokia curtails its own budget for software research and development, said one of the people, who declined to be identified because the final contract hasn’t yet been signed. The agreement runs for more than five years, the people said.

The agreement for the more than billion-dollar payment was part of a campaign by Microsoft to keep Nokia from choosing Google’s Android operating system, one of the people said. Nokia also opted for Microsoft because Windows Phone software, which is newer than Android and has a smaller number of handsets for sale, gives Nokia a better chance to stand out, one of the people said.

We've heard something similar before. Last month, Nokia CEO Stephen Elop told analysts and industry players that apart from the benefits of the alliance that have already been explained, "the value transferred to Nokia is measured in the Bs, not the Ms."





User Comments: 5

Got something to say? Post a comment
Staff
Rick Rick, TechSpot Staff, said:

The part of that deal missing in this news stub (If the rumors are indeed true) are:

- Microsoft gains access to Nokia's patents

- Nokia will have to pay license fees for every Windows Phone 7 device sold

- MS and Nokia will share advertising revenue brought in by the WP7

MS didn't just GIVE away billions of dollars... but it is clear that Nokia is being rewarded for helping WP7 get a solid start into the market.

aj_the_kidd said:

inst that really just pocket change for MS

yRaz yRaz said:

I'm not sure how I feel about this deal. I really enjoy WP7, but it could be sold on its OWN merits.

captainawesome captainawesome said:

I think I'm excited about this. My last two phone have been Nokia phones and I gotta tell you, Symbian is SHITE! And well frankly, the hardware wasn't always that great. My phone zooms in and out when it feels like. Well, actually it doesn't really matter to me though - I'm convinced never to buy a Nokia again.

Lokalaskurar Lokalaskurar said:

Rick said:

- Microsoft gains access to Nokia's patents

- Nokia will have to pay license fees for every Windows Phone 7 device sold

- MS and Nokia will share advertising revenue brought in by the WP7

It is clear that Nokia is being rewarded for helping WP7 get a solid start into the market.

Good point, Windows have some catching up to do before it gains the same status as Apple on the mobile market - it will be required of MS to be very creative on this one (almost as creative as, say, Google).

Also, MS will have to come up with something new "market-wise" that Apple have not. The recently discussed iBoobs for instance, may very possibly be a common application on WP7's.

Wonder if Nokia considered this? Wonder if this billion-$-deal was part of some kind of insurance against this.

Load all comments...

Add New Comment

TechSpot Members
Login or sign up for free,
it takes about 30 seconds.
You may also...
Get complete access to the TechSpot community. Join thousands of technology enthusiasts that contribute and share knowledge in our forum. Get a private inbox, upload your own photo gallery and more.