“Nokia Corp. will get billions of dollars from Microsoft Corp. to ditch its current smart-phone software in favor of Windows Phone 7, Nokia CEO Stephen Elop said Sunday, in a defense of the deal,” Peter Svensson reports for The Associated Press. “Nokia, the world’s largest maker of phones, and Microsoft announced their alliance Friday. Both investors and employees reacted with dismay: Nokia’s stock dived 14 percent and Finnish employees used flex time to go home early.”
“On Sunday, a day ahead of the start of the Mobile World Congress cell phone trade show in Barcelona, Elop told press, analysts and industry players that apart from the benefits of the alliance that were laid out Friday, Microsoft is paying Nokia billions of dollars to switch to Windows Phone 7,” Svensson reports.
Svensson reports, “Elop, a former Microsoft executive, said Finland-based Nokia had been courted by Google Inc. as well, which sought to convince it to use its popular Android software for smart phones. Microsoft’s payments are recognition that Nokia had ‘substantial value to contribute,’ said Elop.”
Read more in the full article here.
MacDailyNews Take: Ballmer*Elop=Failure²
Sad. Very Sad.
Do you see the picture of a hooker paying the John to sleep with her? You should never sleep with a dancing monkey! Never!!
Someone was sold down the river.
LOL! almost fell out of my chair laughing my ass off! great comment!
Dancing Monkey!!!! great. I almost coughed up a hairball.
Company A paying Company B to buy its product makes about as much sense as choosing “Start” to shut down.
seams like prostitution…
seems. Clothing has seams.
I guess this means Nokia will now be just another ‘me-too’ company like the rest
I still continue to say this is good for the market. Two horse races rarely work out well for the customer, you just get segmentation, and one usually ends up dominating. Three strong players should limit the ability of any one player to dominate.
If Microsoft paid *me* billions, I’d adopt Windows. Well… at least I’d consider it.
Many have been seduced by the Dark Side in the past. Stay strong. Use the Force. It is powered by iOS and OS X.
Windows Phone ’07—so popular, they can’t even GIVE it away!
everyone except Elop know Microsoft is about to stick it to Nokia and the billions won’t matter when they go out of business. Any company CHOOSING to follow Microsloths roadmap at any price, can cash out, but they’d better have an escape hatch built in.
Who says Elop doesn’t know? Almost any executive brought in to a sinking ship is in it for the short term (a few years at most). They’ll do massive layoffs, get bonuses for “saving the company money” and when it sinks even lower they bail (or are fired) and draw a massive golden parachute.
Elop knows *very well* that Microsoft is going to shaft Nokia, he’s there to apply the lube. It’s the board that somehow didn’t see this when they brought Elop on board (or didn’t care). Either way, it speaks volumes about the company’s direction, and if I had any Nokia stock I’d be dumping it like there’s no tomorrow.
It was obvious to me as soon as Elop took the CEO position at Nokia that this was going to happen. I just wish I’d had a bet on it.
Same old M$ – nothing to show for decades of work, so they buy a company. Embrace. Extend. Extinguish.
Elop shut down Nokia and hurt the Finish economy, big time.
Microsoft is not really paying billions he refers to a savings of billion from Nokia shifting costs they would ( in his opinion) incur if they developed and promoted an OS, which will now be costs Microsoft incurs.
Stupid reckoning.
Thanks for being one of the few sane ones posting comments here.
Please writers stop this garbage rumor mill, because this “MS paying to Nokia” been rebuked by Elop, MS, and media weeks ago! This is useless, and stop riding on rumor wave!
Guys to be fair, Windows mobile 7 is really nice. its snappy and a good change from all the run of the mill android phones. I’m all Apple myself but we can’t just belittle Microsoft all the time. It might be late in the day but with Windows phone 7 they’ve done good and Nokia will benefit from this.
If you really were fair you would take the headline to heart and admit that Microsoft made a good competitor to Apple’s 2007 iPhone OS. Trouble is they are paying companies to use it in 2011.
You came to the wrong site if you were looking for fair.
You came to the wrong site if you were looking for fairness.
It’s called “Windows Phone 7”, by the way.
Not “Windows Phone ’07” as was stated in the article title.
I guess sarcasm flies over your head. The original iPhone was released in ’07, thus MDN cheekily calls Windows xxx 7 as Windows xxx 07 as a dig.
eFlop
Billions of dollars in coupons and discounts towards store credits.
Actually a smart move by Nokia, and here’s why:
1. Symbian is going nowhere in the smartphone market
2. MeeGo is going nowhere (at least soon) in the smartphone market
3. Adopting Android is gives Nokia just another “Me Too!” piece of hardware to peddle
4. Windows Phone 7 may be going nowhere, but it is at least shipping and different than Android
5. Being paid billions of dollars to use someone else’s software temporarily until you can get a better solution (Nokia hopes MeeGo will be it) is not such a bad deal
This deal is very short-sighted; however. Nokia will lose its brand image if it has to stay tied to Windows Phone 7 for very long. For Nokia to survive in the smartphone market (no one cares about the lower mobile market anymore because it’s not profitable), Nokia needs its own software.
No, if MeeGo is truly the future, Nokia needs to put Symbian in maintenance mode (like SJ did with OS 8 & 9) and pour all their resources into MeeGo and a simplified hardware lineup that can be transitioned to MeeGo as soon as possible. WM7 will simply confuse the Nokia brand and convince developers NOT to develop anything for MeeGo.
I agree. WP7 is a stepping off point for Nokia, until something else comes along. What do they have to lose? Their current strategy isn’t having an impact on the market they’d like.
At least with WP7, they can at least differentiate their mobile experience from the rest. With Microsoft’s marketing machine cranking out their brand of RDF, Nokia can begin delivering a new line of touch-based smartphones. In their customer’s eyes, Nokia’s phones will be as good as, if not better than the iPhone.
Basically, that means Finland is sold to Microsoft.
MicroShaft paid me billions I would adopt, if I can keep my iPad!
According to the article, the payoffs are not unusual. “Analysts believe Google pays manufacturers to use Android …”
I am SHOCKED! Or stunned. Maybe both.
They forgot to mention that the “billions” are in Microsoft Points, not actual cash. 😉
@breeze
True, Nokia will avoid substantial costs in terms of mobile OS development. On the other hand, Nokia is committing itself to paying Windows Phone 7 licensing fees for the foreseeable future. If Nokia sells a lot of Windows Phone 7 based phones, then M$ may eventually recoup its costs and make a profit. Under those circumstances, Nokia would be selling more high-end phones than otherwise, and would also realize more profit. There are a lot of “ifs” associated with this strategy, but both companies appear to be making the best of a bad situation in the smartphone arena. Neither of them had much going otherwise.
True, a lot of “ifs” and the ‘additional horse’ can only detract from Android and fragment the market further which doesn’t hurt Apple any because they are way ahead of the mobile technology that rules they day and coming years.
How do you make a hormone?
Don’t pay her!
(billions anyway)
Let me see now, last time I checked Microsoft had $41 billion sitting in the cash pile. Nice pile of greenbacks to do a lot of magic with Nokia. In fact that idiot Jerry Yang saved me a pile of cash botching the negotiations over Yahoo. What an idiot, turning down $36 billion. Probably turned himself in to a mad house by now counting his imaginary money. 1 billion, 2 billion. I laugh at the silly bugger’s face every time I think of it – dodged the bullet on that one.
When Elop came to me for an underhanded bonus I told him to keep his mouth zippered and pocket the cash. Now I get to buy Nokia for a mere billion – peanuts when you think about it. I’m going to ride those Fins in Espoo right into the ground and spit ’em out when I’m finished with them. Just like what I did with those Zune manufacturers. Do you remember the Plays-for-Sure debacle?
Nokia will be nothing more than skin and bones when I’m through with them. And then I’ll throw them over to Carol Bartz to try to revive them. That old crone knows a thing or two about fattening pigs to the slaughter although I think that Huffington woman’s an ace for selling turd for $315 million. Maybe she used a casting couch to cast her net on that half brained AOL CEO, who knows. Wink, wink.
I’ll give myself a pat on the back and 5 stars for being an absolute bald headed genius on this one. When they open up the Nokia saunas for me to have a lie down in I’ll be sure to grab myself a beer – gimme a Bud, bud – and a couple of luscious blonde Finnish chicks to keep me company. Aaaahhh the travails of being a billionaire.
What Jerry Yang did was bad for Yahoo shareholders, but good for Yahoo employees, Yahoo customers, and Microsoft shareholders.
I hope you can resist the temptation to stab them in the back before you’ve crossed the pond.
Microsoft has always been a double-edged sword, inflicting as much damage on themselves as those with which they do battle.
billions in overpriced funny money ( Microsoft intellectual property)
Makes perfect sense to me. Nokia can cut costs and cease developing its crappy OS, and get a nice smartphone os that sets it apart from all the smartphones from HTC, MOTO, etc. and still get billions in cash. What is wrong with that? There is no need for a Nokia smartphone OS when W7 is given to them. Im not sure, but it seams that Nokia and MS can work together to improve the OS/Phone combinations. Nokia probably would not get such a symbiotic (sp) relationship with Google. I say great, its good for the consumer and competition.
“sets it apart from all the smartphones from HTC, MOTO, etc. ”
Dude, HTC also makes WinPho’07 phones. How does becoming just another hardware manufacturer that has to follow the same specifications as HTC, amongst others, help them differentiate?
“nice smartphone os”
It’s not nice, it’s incomplete junk. I used my nephew’s phone for a while and was immediately struck by how the clock fluctuated the time by several minutes each time it opens, there are residual images from the previous screen when changing screens that won’t go away without powering it off, and the message system doesn’t always send or receive messages. How the hell is that “nice”?
“There is no need for a Nokia smartphone OS when W7 is given to them.”
It’s not given to them since they pay a license per unit. Also, all future development of their phones is completely dependent on Microsoft’s quality and timing.
“I say great, its good for the consumer and competition.”
How is it good for consumers and competition to basically buy out one of the competing operating systems? Having less choices doesn’t make things better.
Again, proof that money cannot buy happiness…
From the full article: “Analysts believe Google pays manufacturers to use Android”
So, Microsoft is doing a net pay for having WinPho on Nokia hardware (although Nokia will shuffle some back in licensing in an accounting maneuver to make it seem like MS is making profits in the short term) and Google probably is paying, too.
This makes sense for both because they are really only making money from app sales and advertising in their paradigm, so market share is critical. It is fair to questin whether MS is actually making $ from apps at this point since they are paying developers. In addition to apps and ads, Apple makes money from the hardware and the contract. I’m sure all sell some content, but the margins there are pretty close to zero. I do not think Apple really needs to worry about market share as long as they are relevant enough to keep developers interested.
With regard to market share, mobile phones are not like with desktops in the early 90s. There, enterprise adoption of a particular platform and cost of migration meant that the winner a majority of the market share was going to get >80%. Phones are cheap in terms of up front money (people are going to be paying a mobile phone contract anyway, so although that is costly, it does not differentiate phones) and are viewed of as having a 1-2 yr lifetime by many consumers.
Another key factor is that the barrier to switching is really driven by the carrier’s early termination fee, not the hardware of software. So while Nokia/WinPho does create more choice, I’m not sure how it really affects “competition”, which is constrained nearly as much by carriers. The iPhone on Verizon was good for choice and competition, since they vend Android, iOS, and WinPho devices. A WinPho/Nokia on T-mobile or Sprint is competing in some way with the iPhone, but there it is diluted significantly by the competition of the carrier. This has a strong correlation to the relative quality of the service of the providers in a given region. So, iPhone in NY and SF was not really competing against Android on Verizon – it was AT&T vs Verizon.
Finally with regard to competition, Apple’s innovative is spurred by making good products, which they believe drives sales. They have tried to look beyond what consumers want to what consumers need, but don’t know it. The iPod and the iPhone are prime examples of that. They were not spurred by a competitors product. At least with regard to Apple, competition really will not affect the products they develop.