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Microsoft Paid Nokia Quarter of a Billion Dollars to Adopt WP7

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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  • g4114rd0
    Nokia sure they'll have a short place for you too.
    Reply
  • de5_Roy
    this money came from all the patent royalty fees microsoft got. thank android, ms. :P
    Reply
  • 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.
    Reply
  • outlw6669
    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...
    Reply
  • Ranger104
    No smart phones in my home. sounds like wasted money.
    Reply
  • aftcomet
    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.
    Reply
  • Murissokah
    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.
    Reply
  • aftcomet
    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.
    Reply
  • g00fysmiley
    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.
    Reply
  • icemunk
    Ranger104No smart phones in my home. sounds like wasted money.
    AKA being poor
    Reply