“Microsoft Corp. will pay Nokia Oyj more than $1 billion to promote and develop Windows-based handsets as part of their smartphone software agreement, according to two people with knowledge of the terms,” Dina Bass reports for Bloomberg.
“Nokia will pay Microsoft a fee for each copy of Windows used in its phones, costs that will be offset as Nokia curtails its own budget for software research and development, said one of the people, who declined to be identified because the final contract hasn’t yet been signed,” Bass reports. “The agreement runs for more than five years, the people said.”
Bass reports, “Nokia shares have dropped 26 percent since the accord was unveiled Feb. 11, reflecting doubts about the move to adopt Microsoft’s operating system, which is less than six months old and has just a few percentage points of market share.”
MacDailyNews Take: Windows Phone ’07 has “a few percentage points of market share?” Says who?
Read more in the full article here.
MacDailyNews Take: You might be a Ballmer if… you have to pay a floundering company over $1 billion to use your mobile OS.
That’s just gos to show you, Microsoft has money to burn… Boomshakalakalaka!!
It’s pretty sad, but this must be the only way they can get their pathetic OS on a phone now a days.
It’s like having the prostitute pay you.
That is the way I saw this too. This is getting sad. Very sad!!
You have to see Ballmer and Microsoft’s real problem now. Apple is giving away software products (apps) for $4.99 each (or for FREE) that are so superior to the crap coming from Microsoft. There is no money in this for them! APPLE IS SELLING HARDWARE AND APP AND SERVICES ARE JUST THE ICEING!
Actually, all the stuff coming out of Microsoft and Nokia says “Windows Phone” NOT “Windows Phone 7”
Don’t expect a Nokia / Microsoft phone until Windows Phone 8 ships.
MSFT shareholders must be delighted at this news…
I like our strategy. I like it a lot.
“has just a few percentage points of market share”… The hell? Do they even have ONE percentage point? Has anybody seen one in the wild?
So how much they gonna pay me to use their phone?
$50 a week? Beer money?
I’ll just turn it on and throw it in a drawer.
How. Pathetic.
So let me get this straight… Microsoft, the provider of the product/service, is PAYING the customer $1,000,000,000 to use its product/service. I guess that makes sense in up-side-down backward Microsoft world. I want to visit that world and get paid to have dinner at a four-star restaurant.
The other existing Windows Phone 7 “partners” need to demand equal treatment. Better hurry, before the twin PC Windows/Office cash cows die…
Yup. And as far as Microsoft is concerned, they’ve hit bottom and are digging themselves six foot under. They can only return from the undead by selling productivity apps and other services… Got it. Microsoft needs to get into the porn business!
Microsoft analogous to a four star restaurant???
Either you live in a depressed city or don’t get out much pal, a sleazy diner would be offended if it was compared to Microsoft.
I gotta admit, I would switch to a Windows 7 laptop, a Zune for my music and an X-Box for a TV hookup for $1,000,000.00
I understand where Nokia is coming from.
Hilarious!!!
Is it too late for me to line up?
I would buy the devices you mentioned for that much, far less even. But I wouldn’t use them for that much or more. It would be like getting $1 billion and being old I’d have to live my life in a rat infested mobil home and could only have a 13″ black and white tv. If I had $1 billion I’d want to buy and use high end products, not cheap crap.
Using WP7 is better than Android since Microsoft pays you. Free is no longer good enough. I mean, Microsoft paid Verizon $500M to put Bing on their smartphones, so of course Microsoft is paying Nokia.
I’m sure they’ll make it up in volume, whatever that means.
+1!
It takes a head made entirely out of meat to pull of a false accounting stunt like this.
Ballmer is a seminal case study in bad business decisions. Here starts yet another long-winded chapter for future text books.
hahahahahahah
What, this is true?
$1B is much less than the 26% that Nokia lost in stock value in one week ($31B today), so how has Nokia gained?
Holy Mackerel indeed! What a great point you make. BOOM.
Nokia and RIM both on death spirals. only question is, what Chinese companies will buy their kaput shells (a la Palm) – and how soon.
This sounds illegal. It’s one thing to give away free sample products to get people hooked, something else (and illegal) to dump, and a whole new world when you pay a major manufacturer to use your product in the vane hope of driving away competition, and establishing a monopoly status. If I was a share holder I’d run away as fast as I could from any company that was willing to pay out a billion dollars just get someone to use my product.
I agree. Reminds me of the concept “offer they can’t refuse.”
What other companies is Microsoft, or anyone, for that matter, gonna bribe his way?
So, to summarise, the only way in which Microsoft can expedite the growth of Windows Phone 7 (I’m becoming more and more confused by the ever-changing names of MSFT’s mobile solution – Windows CE, Windows Mobile, Windows Phone 7, presumably Windows 8 will be a unified platform when it ships) is by paying a company $1 billion.
Paying so much to an entity that is desperate (“ship on fire”) is actually a sign of desperation in its own right.
According to the linked article, it would appear that Android has been eating into Symbian’s market, whilst Microsoft and Apple have seemingly swapped positions over the years 2008-2010 and Microsoft’s offering has gone backwards by becoming a lesser player in an expanding marketplace.
Microsoft (and the CEO of Nokia, who himself is ex-MSFT) need to face a simple fact: corporates are deserting the Microsoft mobile strategy in droves and migrating to iOS (a phenomenon that speaks volumes for the quality of the ActiveSync implementation on iOS, the support for industry-standard VPN hardware and the remote wipe functionality) whilst the consumer/user-chooser market is (where budget is an issue) choosing Android at the expense of Symbian.
Unless Nokia and MSFT have some brilliant strategy for running Symbian apps in some sort of virtualised environment and an equally-brilliant strategy for migrating the Symbian developer base to Windows Whatever, they face an uphill struggle: there are freelance iOS developers everywhere and corporate-standard development consultancies in every major international market and – to add insult to injury – many minor markets as well.
Nokia are also gambling on Microsoft’s checkered record of delivering to schedule: Windows 7 has pretty much lost this generational round; (it doesn’t help when your first attempt at an update bricks a significant number of phones and the platform won’t have multitasking until the tail-end of 2011/first-quarter of 2012.
All of this means that Nokia (well, Elop actually) are banking on Windows 8 running on ARM as being their future salvation: but this means relying on MSFT to deliver on a new chip with a completely different philosophy.
To put the mess into which both parties have dug themselves into some perspective: Nokia’s N8 is running the ARM design that was in Apple’s iPhone 3G (a phone effectively retired in June 2009) whilst the Snapdragon technology underpinning the Samsung Focus dates back to the tail-end of 2008: the A4 was already faster than most of the ARM-referenced competition and the A5 enhances that position alongside the speed increases in iOS 4.3 – presumably the A6 will be based on ARM’s A15 design which will push Apple even further ahead.
If this is the strategy that Ballmer likes a lot, he really needs to re-assess his values and faculties for critical reasoning, because it looks a lot like two men fighting for the same lifejacket.
Wow, that’s some “summary” there.
Spot on. Thanks for the summary.
That is an excellent summary. I may quote parts of it in the future.
This is ASTOUNDING…. This is now undeniable PROOF that Steve Balmer is a MORON ! IF the Microshaft board doesn’t fire him IMMEDIATELY, then it’s even more proof that Microshaft is DONE..
Your headline reads: “Microsoft to pay Nokia ”
However your article says in the 2nd paragraph: “Nokia will pay Microsoft a fee…”
I guess it’s a typo?
No, try reading it again
Not unexpected. Ballmer the salesman thinks he can “buy” marketshare.
Don’t think he has talked to teenagers, 20 somethings and the rest of us lately. I have not heard the word Nokia or Microsoft, much less together in so long I can’t remember when, but it is a year or more ago.
They are both toast in smartphones.
Xavier
I read the link to the article in Bloomberg and also was confused. “Nokia will pay Microsoft” is a characterization
by Bloomberg. In busines the definiton of ‘pay’ has no
relation to what us ordinary people think it is.
The monopoly approved system from Microsoft strikes again. Only a company that knows that they will receive guaranteed revenue year after year can blow a wad to pay someone to sell their crap. FREAKING HILARIOUS!!!
Windows Phone 7 is so bad Microsoft can’t even give it away for free, they have to pay Nokia to use it!
Last quarter Microsoft was lucky it had a huge boost from Kinect. The next quarter should be fun if Apple beats them on revenue and profit. Windows Phone 7 is a failure and the shareholders will be baying for blood especially after the Kin fustercluck. Ballmer’s days are numbered.
I give Nokia four years before some Chinese phone maker buys the leftovers. When announced “as Nokia curtails its own budget for software research and development” that was when the toilet flushed. Now it’s just how many times it circles.
The use to sell Win Mo licenses for around $8-15 a pop.
to make back a billion bucks (if my maths is correct) will take them at $15 each about 67 million phones.
considering they have sold a whooping 2 million WP7 in 2010 with a bunch of manufacturers on 60 carriers and 30 countries (after spending 500 million on advertising) – making a jaw dropping $30 million in revenue… I think they are going to have a stiff climb making back that billion with Nokia…