Nokia and Microsoft sign Windows Phone deal worth ‘billions of dollars’


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Nokia and Microsoft said on Thursday that the two companies have signed an agreement worth ‘billions of dollars’ to put the Windows Phone OS on Nokia handsets, along with other collaborations.

‘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,’ the two companies said in a joint statement.


However, Nokia won’t be the only company getting paid in the now-official deal.

The two tech giants said Microsoft was going to receive ‘a running royalty from Nokia for the Windows Phone platform, starting when the first Nokia products incorporating Windows Phone ship.’

Just how much the royalties would add up to wasn’t disclosed, but the companies said ‘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.’

The exact length of the long-term deal between Microsoft and Nokia wasn’t disclosed Thursday, but the first Nokia phones running the Windows Phone OS are scheduled to land in stores by 2012.

The two companies also said they’ve made ‘significant progress on the development of the first Nokia products incorporating Windows Phone’ and have assigned hundreds of employees on getting the new smartphones out into the market.

The agreement also calls for the upcoming launch of a new Nokia-branded ‘global application store’ built on the Windows Marketplace infrastructure to sell apps for Nokia devices.


The new Nokia storefront for mobile apps will allow developers to publish and distribute applications ‘through a single developer portal to hundreds of millions of consumers’ that use the Windows Phone OS, Nokia’s internally built Symbian OS and other Nokia phones, the statement said.

The two firms have also begun reaching out to outside application developers to get them working on new apps for the Nokia Windows Phone devices, with the phone maker porting over some of its own ‘key applications and services’ to work on the new gadgets, the statement said. ‘At the highest level, we have entered into a win-win partnership,’ said Stephen Elop, Nokia’s president and CEO. ‘It is the complementary nature of our assets and the overall competitiveness of that combined offering, that is the foundation of our relationship.’

Elop was a Microsoft executive before moving to Nokia last September. Together with Microsoft’s CEO, Steve Ballmer, Elop announced the deal between Nokia and Microsoft in February in London.

The February announcement followed reports of a company memo Elop sent out to Nokia employees describing the company’s direction as equivalent to ‘standing on a burning platform’ with ‘more than one explosion -- we have multiple points of scorching heat that are fuelling a blazing fire around us.’

Over the last few months, Ballmer has praised the deal as good for Nokia, Microsoft and smartphones in general.

‘Our agreement is good for the industry,’ the Microsoft CEO said in the Thursday 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.’


The deal will move the majority of Nokia’s smartphones to the Windows Phone OS, largely leaving behind Nokia’s Symbian operating system, which was the world’s most used phone OS until Google’s Android surpassed it toward the end of last year.

The agreement does, however, leave Nokia free to use other operating systems outside of Windows Phone, such as new iterations of Symbian or even software from Microsoft’s competitors.

As the two companies said in February, the partnership will also include an integration of Nokia’s mapping, navigation and some location-based services to the Windows Phone OS.

Nokia will have input in language support, imaging and other areas of development in the Windows Phone OS, the statement said.

Microsoft will provide its Bing search services across Nokia’s phone lineup and offer software that will be used for ‘productivity, advertising, gaming, social media and a variety of other services,’ the companies said.



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-- Nathan Olivarez-Giles