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Microsoft reportedly paying Nokia $1bn to use WP7

by Scott Bicheno on 8 March 2011, 10:08

Tags: Microsoft (NASDAQ:MSFT), Nokia (NYSE:NOK)

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Controlled leak

We've seen rumours about the nature of the deal between Microsoft and Nokia before, but a report from Bloomberg has now put a figure on it: a billion dollars.

That, according to a couple of inside sources, is what Microsoft offered Nokia in the bidding war between itself and Google once it became clear that new CEO Stephen Elop was giving up on Meego and looking for a third-party smartphone platform.

Of course it's not being positioned as an outright bribe; Microsoft is getting all kinds of value in return, but more than anything else, this story puts a value on how important the mobile land-grab is to Microsoft.

Apparently Nokia will pay Microsoft a licence free for Windows Phone 7, but surely this will be more than negated by the money flowing in the opposite direction, despite claims to the contrary in the report.

It's highly unlikely that Microsoft is supporting Samsung, HTC and LG (and Sony Ericsson?) to anything like this extent, so the asymmetrical nature of Microsoft's relationships with its WP7 partners is highlighted once more.

The rest of the report is just a rehash of the rationale behind the deal as told by the two Steves when it was first announced, only this time it has come from some analysts, so it's official. Elop has already shown a propensity towards controlled leaks, as shown by the burning platform memo, and this smells of the same.

Presumably the two companies are close to announcing the terms of their deal and this leak is designed to smooth the ground. The report repeatedly stresses how great this deal is for both companies...


HEXUS Forums :: 3 Comments

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lol. I thought Nokia would be asking for money considering their financial position. Looks like people were already willing to offer them money!
if they pay me $1bn dollars i'll use a windows 7 phone (i'd probably do it for free but ssshhhh)
Now now its not about using, its about financing them a bit, and getting that all important mobile ad space.

Mobile search and Mobile advertising is something all investor types are wetting themselves over. Whilst I think google stock is almost undervalued in this regard, it is something everyone knows is going to be a significant future revenue stream.

So Microsoft cough up some cash to help finance the migration, they get fees back for every OS sold, and then future income from each handset, it is this last bit that I'd imagine was the fun bit to negotiate.

But for Nokia, why go with google, what would they be offering? As seen by the main sponser of MWC the chinese are coming with very cheap devices, running the cheapest OS makes sense for them. A lot of the google phone manafacturers will be sucked into a low end pricing war with google quitely laughing as the OEMs chase the few cents.

As such I doubt google would offer nearly as much as MS would.