Microsoft to Pay Nokia $1 billion for Adopting WP7

March 8, 2011, By Sanjeev Ramachandran

Adopt Windows Phone 7 and get $1 billion in return. Well that is the deal that follows up the Nokia-Microsoft WP7 handset deal we told you about some time ago. Microsoft is believed to have agreed to pay up that amount of money to Nokia if the handset maker chooses WP7 over Google’s Android OS.

In what could be seen as an agreement that would mutually benefit Microsoft and Nokia financially, a part of the payment to Nokia would be made before the company starts selling the phones.

That could also mean that  Microsoft would be bearing some upfront cost in the partnership. Further, Nokia will pay Microsoft a fee for each Windows Phone 7 device it manufactures.

Nokia will pay Microsoft a fee for each copy of Windows Phone 7 OS used in their phones. This could be seen as adequate to offset cots as Nokia has been trying to snip their software R&D budget. Though the final deal is yet to be inked, we hear the agreement will be for more than five years.

The $1 billion payment being made by Microsoft will aim at promoting and developing Windows-based handsets, as has been revealed when the smartphone software agreement came about.

A Bloomberg report in this regard quoted Laurie Armstrong, a Nokia spokeswoman as saying that “the final contract hasn’t been signed and the company will share further details when they are complete.” Meanwhile, Microsoft spokeswoman Melissa Havel declined to comment on the specifics.

The move, as we mentioned earlier, would help Microsoft convince Nokia from choosing Android OS, and thereby salvage Microsoft’s software business.

Given that the Windows Phone software is newer than Android, Nokia also stands to gain as the deal could bring to Nokia a better chance to stand out in the crowd.

 

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