Microsoft Paid Nokia Quarter of a Billion Dollars to Adopt WP7
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.