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Microsoft Paid Nokia Quarter of a Billion Dollars to Adopt WP7

By - Source: SlashGear | B 48 comments

That's a lot of dough.

When Nokia and Microsoft last year revealed a strategic partnership that would see the former use Windows Phone 7 as its primary smartphone OS, it was obvious what Nokia stood to gain from the deal. The Finnish company, once a king in the cell phone industry, was struggling in the smartphone space. The company needed a smartphone OS that already had an established user base and the support and apps necessary for growth. However, this wasn't a one-sided deal. Though Nokia has been less than successful in the smartphone market, the company has a lot of brand loyalty, and the partnership offered Microsoft the chance to reach millions more customers. As it turns out, Microsoft paid rather a lot for this privilege.

Though both parties have remained quiet about the financial details of their agreement for the better part of a year, information was revealed by Nokia yesterday during a quarterly earnings call. According to Nokia's Q4 results, which were released this week, Microsoft paid Nokia $250 million to use Windows Phone 7. Described by Nokia as a "platform support payment," this isn't a one time thing. According to SlashGear's Chris Davies, who was first to pick up on the figure, there will be more payments made by Microsoft. The eventual figure is thought to be more than one billion dollars.

"Our broad strategic agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft," Nokia said in its results. "We have a competitive software royalty structure, which includes minimum software royalty commitments."

So far we know next to nothing about what Nokia is paying Microsoft, but Nokia did say that over the life of the agreement "both the platform support payments and minimum software royalty commitments are expected to measure in the billions of US dollars.

Nokia also confirmed yesterday that it has sold more than a million Lumia handsets, as predicted by analysts earlier this week.

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Top Comments
  • 10 Hide
    lca1443 , January 26, 2012 3:27 PM
    g00fysmileyI don't have a waffle maker in my home, but that doesn't mean that all companies who manifacture waffle makers are just wasting thier money and resoarces, there is a market for them.


    I have one, you can borrow it if you would like.
Other Comments
  • -6 Hide
    g4114rd0 , January 26, 2012 2:10 PM
    Nokia sure they'll have a short place for you too.
  • 5 Hide
    de5_Roy , January 26, 2012 2:17 PM
    this money came from all the patent royalty fees microsoft got. thank android, ms. :p 
  • Display all 48 comments.
  • -8 Hide
    beta tester , January 26, 2012 2:21 PM
    $250 million is not a lot to be paid to destroy your company. Nokia is destroying itself.

    The media was sucked into the sales spin of a million Windows Phones sold. You'll find that these were not sold to consumers. They were sold to wholesalers. Shuffled from one warehouse to another to make it look like the Windows Phones were sold when they weren't. It's called cooking the books.
  • 5 Hide
    outlw6669 , January 26, 2012 2:24 PM
    Not really sure if this is really news or not.

    It was already reported in March of last year that Microsoft would be paying Nokia north of $1B to adopt their Windows Phone OS.
    It sounds like this is just a payment on the $1B+ commitment to me...
  • -5 Hide
    Ranger104 , January 26, 2012 2:29 PM
    No smart phones in my home. sounds like wasted money.
  • 8 Hide
    aftcomet , January 26, 2012 2:29 PM
    Despite the naysayers, I think Nokia will bring itself back to its former glory. Don't understand why everyone hates Windows Mobile. It's actually really, really good. Where Nokia was lagging was in its software/OS. With MS to focus on that aspect, Nokia can focus on doing what it does best: make phones.

    Excellent deal for both parties. I can even see the two companies merging down the road or at least strengthening their alliance even further. Apple is ultra competitive right now. With Nokia and MS together, it'll keep the other honest.
  • -3 Hide
    Murissokah , January 26, 2012 2:31 PM
    Now it's starting to make sense. I still think it was a bad deal, though, since I can't see Nokia as competitive while running WP7. They should've gone Android.
  • 7 Hide
    aftcomet , January 26, 2012 2:31 PM
    Ranger104No smart phones in my home. sounds like wasted money.


    Don't see why Smartphones are a waste of money. Maybe you don't need it right now, but down the road it will become a necessity in life just like the computer. A smartphone is essentially a pocket computer.

    The correct tool for the required job.
  • 4 Hide
    g00fysmiley , January 26, 2012 2:49 PM
    Ranger104No smart phones in my home. sounds like wasted money.


    I don't have a waffle maker in my home, but that doesn't mean that all companies who manifacture waffle makers are just wasting thier money and resoarces, there is a market for them.
  • -6 Hide
    icemunk , January 26, 2012 2:56 PM
    Ranger104No smart phones in my home. sounds like wasted money.


    AKA being poor
  • -1 Hide
    chiefbox , January 26, 2012 3:05 PM
    Shelling out money to OEM & ODM customers worked for intel for years, and still does today ! If you can't beat Apple or Google, then bribe, I mean subsidize someone to use your crappy WP7 product !!
  • 10 Hide
    lca1443 , January 26, 2012 3:27 PM
    g00fysmileyI don't have a waffle maker in my home, but that doesn't mean that all companies who manifacture waffle makers are just wasting thier money and resoarces, there is a market for them.


    I have one, you can borrow it if you would like.
  • 6 Hide
    john_e , January 26, 2012 3:30 PM
    Its no different when Microsoft bailed out Apple from going bankrupt. MS gave Apple money in exchange they use Office on their Mac, and Apple gave MS non voting stock. Nokia was going no where comes MS with a cash injection, in exchange Nokia uses MS OS, its a win win for both MS and Nokia.
  • 2 Hide
    john_e , January 26, 2012 3:32 PM
    chiefboxShelling out money to OEM & ODM customers worked for intel for years, and still does today ! If you can't beat Apple or Google, then bribe, I mean subsidize someone to use your crappy WP7 product !!


    Oh you mean just like when Microsoft bailed out Crappy Apple (using your term of crap) from bankruptcy in exchange they use Office on their Mac's, and Apple gives MS non voting stocks.
  • -6 Hide
    captaincharisma , January 26, 2012 3:34 PM
    Ranger104No smart phones in my home. sounds like wasted money.


    yea tell that to every business in the world who wants there workers to have access to e-mail 24/7

    FAIL
  • 8 Hide
    back_by_demand , January 26, 2012 3:38 PM
    beta tester$250 million is not a lot to be paid to destroy your company. Nokia is destroying itself.The media was sucked into the sales spin of a million Windows Phones sold. You'll find that these were not sold to consumers. They were sold to wholesalers. Shuffled from one warehouse to another to make it look like the Windows Phones were sold when they weren't. It's called cooking the books.

    Tin.
    Foil.
    Hat.
  • 2 Hide
    back_by_demand , January 26, 2012 3:39 PM
    Ranger104No smart phones in my home. sounds like wasted money.

    Amish, per chance?
  • -4 Hide
    acadia11 , January 26, 2012 3:41 PM
    chiefboxShelling out money to OEM & ODM customers worked for intel for years, and still does today ! If you can't beat Apple or Google, then bribe, I mean subsidize someone to use your crappy WP7 product !!


    Windows 7 , is actually pretty freaking good, and windows 8 will put an end to the toy OS's that we call android and iOS hardware has noww aught up soyou can have truly productive mobile software and windows owns the productivity world. Remember 1984. Apples closed eco-system will do them in again.
  • -2 Hide
    lamorpa , January 26, 2012 3:42 PM
    Ranger104No smart phones in my home. sounds like wasted money.

    No smarts in my home. sounds like wasted space.
  • 0 Hide
    WR2 , January 26, 2012 3:45 PM
    Nokia did not ask for enough money.
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