Feeds

Microsoft 'paid Nokia $1bn' for WinPho 7 deal

It's an ad, ad, ad, ad world

Boost IT visibility and business value

Nokia's jaw-dropping decision to adopt Windows Phone 7 as its handset operating system was juiced by an equally jaw-dropping payout from Microsoft of over $1bn, according to a report citing people with knowledge of the deal.

Bloomberg reports that Redmond will ship that $1bn to Espoo, Finland, in support of Nokia's efforts to "promote and develop" smartphones based on Microsoft's as-yet-unloved mobile operating system in a deal that's set for "over five years."

And speaking of unloved, Bloomberg also notes that Nokia's shares have shed over a quarter of their value since the announcement of the WinPho 7 deal less than one month ago.

The sources also said that Nokia will pay Microsoft a licensing fee for each copy of the operating system it installs on its handsets, but that the $1bn-plus payout will begin before any of those fees cross the pond on their way to Redmond.

In addition, one of the chatty tipsters noted that the payout was a bribe inducement to keep Nokia from selecting Android as its go-to mobile OS. Looking at it another way, a source said, the choice of WinPho 7 will give Nokia the opportunity to "stand out" from the crowd of Android phones increasingly flooding the market.

That assertion, when you think about it for a moment, is an odd bit of reasoning: choosing an operating system on the virtues of it being comparatively unpopular is hardly a slam-dunk bit of marketing genius.

Two other tidbits in the sources' tattling make more sense, however. One is that as part of the deal, Microsoft will get access to Nokia's patent portfolio, and the other is that Redmond will gain the right to leverage Nokia's Navteq mapping technology to support location-based advertising.

After all – as Google has amply proven – it's an ad, ad, ad, ad world, and a collaborative location-based advertising effort could bring billions in revenues to both Nokia and Microsoft over the course of the deal.

Microsoft's CFO Peter Klein certainly thinks the deal was worth a cool billion. Speaking at the ISI Annual Conference shortly after the Nokia deal was announced, he said: "Certainly this deal is a long-term, multifaceted deal which has lots of commitments by both companies, and there's going to be search revenue and there's going to be royalty [revenue]. There's going to be joint go-to-market opportunities. And obviously both parties are aligned, and we think this has great long-term financial opportunities."

Perhaps so. But as with any such mega-deals between industry heavyweights, implementation is all – and if Bloomberg's sources are correct, Nokia has a $1bn head start. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.