Did Nokia's signature cost Microsoft $1bn?

Did Nokia's signature cost Microsoft bn?Things had gone a little bit quiet on the Nokia-Microsoft mobile partnership, with the involved parties apparently still hammering out the finer points of their plan to build that much-vaunted “third ecosystem” alongside iOS and Android.

But there's nothing subtle about the latest rumour we're hearing – that Microsoft effectively agreed to hand Nokia a cool $1-billion to keep it out of the clutches of Android.

When Stephen Elop and Steve Ballmer announced the deal to put Windows Phone software on Nokia hardware last month, both parties were at pains to play down any talk of actual money having changed hands.

Erstwhile partner Intel claimed otherwise, however, saying Nokia had received “incredible offers” to turn its back on MeeGo and sidle up to Microsoft. And new information aired by Bloomberg appears to support that.

Two people “with knowledge of the terms” of the agreement claim Microsoft is paying Nokia a substantial amount of money up front – as much as $1bn – for access to its extensive patent library and its much-liked mapping service for a period expected to last upwards of five years.

In return Nokia will pay Microsoft a licensing fee for every copy of Windows Phone it uses, a deal that will still see the Finnish phone maker saving money because of the reduction to its massive R&D budget. Microsoft, meanwhile, expects the royalties it will receive over time will exceed any up-front payment it had to lay down to get Nokia onside in the first place.

“In success, it is a very mutually beneficial deal economically for both companies,” Microsoft chief financial officer Peter Klein told investors at a conference last week.

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JanSt / MOD  Mar. 8, 2011 at 14:35

Hahaha I like the phrasing - nicely makes Microshaft the victim in this mess, doesn't it? It "cost MS" 1bn - rather than MS, hm..., "bribed"/"convinced fiscally"...


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