Before we list the details of the agreement, it's arguably more to first note that Microsoft and Nokia confirmed significant progress on the development of the first Nokia products incorporating Windows Phone. The duo claims hundreds of employees already engaged on joint engineering efforts, that the companies are collaborating on a portfolio of new Nokia devices, and that Nokia has started porting key applications and services to operate on Windows Phone. Last but definitely not least, joint outreach has begun to third party application developers.
With the definitive agreement now signed, both companies can now start convincing operators, developers, and other partners to join the new ecosystem. At the same time, the two confirmed they are aiming to secure volume device shipments for 2012.
Now, with that out of the way, here are the four main points of the agreement:
- A combination of complementary assets. Nokia will deliver mapping, navigation, and certain location-based services to the Windows Phone ecosystem, as well as build innovation in areas such as imaging, while contributing expertise on hardware design and language support. Microsoft will provide Bing search services across the Nokia device portfolio as well as contributing strength in productivity, advertising, gaming, social media and a variety of other services.
- Microsoft will receive a running royalty from Nokia for the Windows Phone platform, starting when the first Nokia products incorporating Windows Phone ship. The royalty payments are competitive and reflect the large volumes that Nokia expects to ship, as well as a variety of other considerations related to engineering work to which both companies are committed. Microsoft delivering the Windows Phone platform to Nokia will enable Nokia to significantly reduce operating expenses.
- In recognition of the unique nature of Nokia's agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars.
- An agreement that recognizes the value of intellectual property and puts in place mechanisms for exchanging rights to intellectual property. Nokia will receive substantial payments under the agreement.
There are three other points that we think are worth pointing out separately. We already know that Microsoft and Nokia will work together to reach out to developers, but the two have agreed to make Windows Phone developer registration free for all Nokia developers. There are also plans to open a new Nokia-branded global application store that leverages the Windows Phone Marketplace infrastructure so that developers can publish and distribute applications through a single developer portal to consumers that use Windows Phone, Symbian, and Series 40 devices. Lastly, Nokia will contribute its expertise in operator billing to ensure participants in the Windows Phone ecosystem can take advantage of Nokia's billing agreements with 112 operators in 36 markets.
"At the highest level, we have entered into a win-win partnership," Stephen Elop, President and CEO of Nokia Corporation, said in a statement. "It is the complementary nature of our assets, and the overall competitiveness of that combined offering, that is the foundation of our relationship."
"Our agreement is good for the industry," Microsoft CEO Steve Ballmer said in a statement. "Together, Nokia and Microsoft will innovate with greater speed, and provide enhanced opportunities for consumers and our partners to share in the success of our ecosystem."