Microsoft paying Nokia billions to adopt Windows Phone platform

Posted:
in iPhone edited January 2014
Nokia will receive billions of dollars from Microsoft for adopting the Windows Phone platform on future smartphones, as the two companies struggle to compete with Apple and Google in the mobile space.



According to The Associated Press, Nokia Chief Executive Stephen Elop revealed at this week's Mobile World Congress that Microsoft is paying the Finnish handset maker billions of dollars to switch to Windows Phone. Elop revealed the agreement in an effort to appease investors, after his company's stock tumbled 14 percent following the announced partnership with Microsoft.



The CEO said Microsoft's payments acknowledge the "substantial value to contribute" that Nokia offers the Redmond, Wash., software giant. He also said that his company will pay Microsoft royalties for the use of its software, as is standard practice.



Elop was also asked if he's a "Trojan horse" for Microsoft, his former employer, to which he replied "No." He said the decision to adopt the Windows Phone platform was unanimous among Nokia's senior management.



Nokia announced last week that it plans to ditch its Symbian operating system for future smartphones and will instead focus on creating new handsets running Microsoft's Windows Phone platform. Through the partnership, in which the two will "integrate key assets," the companies said they plan to introduce a "new global mobile ecosystem" by jointly creating new mobile products and services.



Nokia went on to reveal on Monday it plans to release its first handsets running the Windows Phone platform this year. Elop said that his company is "feeling the heat" to meet a 2011 deadline.



Elop, previously the head of Microsoft's Business Division, took over as CEO of Nokia in September of 2010. Nokia has struggled to maintain its dominance in the smartphone market as competitors Apple and Google have found great success.



Elop candidly acknowledged those struggles in a 1,300-word letter to employees issued this month. In it, he compared the company's Symbian mobile operating system to a "burning platform" that the company was forced to jump off of in order to survive.
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Comments

  • Reply 1 of 62
    richlrichl Posts: 2,213member
    This story has already been corrected in the press. The actual story is that Nokia will save billions by adopting Windows Phone.
  • Reply 2 of 62
    freerangefreerange Posts: 1,587member
    A marriage made in hell.



    Apparently when you leave your job at microsoft you have a big "MORON" tattooed to your forehead as you have no real clue how to run a non-monopoly business. Why in the world would you announce this joint effort to the world up to a year before you can actually implement it in new devices, and before you've had time to effectively prepare/ transition your huge installed user base? Nothing says "abandon my brand" like "I'm going to dump the OS you are now using, because it has no future and I sold you crap, and we will not have something new to replace it for you for the next 12 months or so!"



    This is why Apple has such tight security on info leaks on new products et al. (Remember the intel switch that went so smoothly after it wasn't announced until products were actually ready for sale.) It is a competitive advantage to keep secrets and protect the existing business - sell what you have. Now all loyal Nokia users have been told / given permission to look for something else that is better because what they are using has no future. And that something new and better most certainly won't be MSFT/Nokia handsets. ROFLOL at this one.
  • Reply 3 of 62
    I think Microsoft should should just buy out Nokia already, get even more in savings and keep it all in-house.



    This JV thing will simply drag on, with lots of buck-passing and no clear outcomes.....
  • Reply 4 of 62
    Quote:
    Originally Posted by FreeRange View Post


    A marriage made in hell.



    Apparently when you leave your job at microsoft you have a big "MORON" tattooed to your forehead as you have no real clue how to run a non-monopoly business. Why in the world would you announce this joint effort to the world up to a year before you can actually implement it in new devices, and before you've had time to effectively prepare/ transition your huge installed user base? Nothing says "abandon my brand" like "I'm going to dump the OS you are now using, because it has no future and I sold you crap, and we will not have something new to replace it for you for the next 12 months or so!"



    This is why Apple has such tight security on info leaks on new products et al. (Remember the intel switch that went so smoothly after it wasn't announced until products were actually ready for sale.) It is a competitive advantage to keep secrets and protect the existing business - sell what you have. Now all loyal Nokia users have been told / given permission to look for something else that is better because what they are using has no future. And that something new and better most certainly won't be MSFT/Nokia handsets. ROFLOL at this one.



    I love this. It is an excellent point. The head of Nokia has basically told everyone thinking of buying a Nokia phone not to buy a Nokia phone because they run a rubbish OS. Nice one Elop. I am really looking forward to this going totally wrong.
  • Reply 5 of 62
    tundraboytundraboy Posts: 1,614member
    My take away from this is that the US really has the best software engineers in the world if what MS has to offer is still better than Nokia's own in-house alternatives.



    Now let's sit back and watch as the US policy of favoring Wall Street fat cats above everyone else eventually throws this critical industry away too.
  • Reply 6 of 62
    Quote:
    Originally Posted by garyemery View Post


    I love this. It is an excellent point. The head of Nokia has basically told everyone thinking of buying a Nokia phone not to buy a Nokia phone because they run a rubbish OS. Nice one Elop. I am really looking forward to this going totally wrong.



    Yes, qand they are saying: we are going to fire all our enginneers, that know nothing about microsoft technologies, because they are crap too.



    Nokia employers will live an interesting life next year.
  • Reply 7 of 62
    Quote:
    Originally Posted by garyemery View Post


    I love this. It is an excellent point. The head of Nokia has basically told everyone thinking of buying a Nokia phone not to buy a Nokia phone because they run a rubbish OS. Nice one Elop. I am really looking forward to this going totally wrong.



    It?s simple. Nokia dropping Symbian for a symbiotic relationship with MS. This is best chance both of them have for getting a stable ground in smartphones. Elop is doing what Jobs did when he came back to Apple. Apple had a rubbish OS, too, and they admitted it.



    This is Nokia?s best move. WP7 is a good modern mobile OS. Nokia has HW knowledge but no SW chops so even if they choose Android, they couldn?t pull off a Nokia-esque UI or a vetted app store. They couldn?t even make it the best Android phone on the market since that will require driver knowledge which they haven?t shown to possess. So what other options did they have besides going down the same miserable path and not admitting that need to make changes?
  • Reply 8 of 62
    nhtnht Posts: 4,456member
    That's an unprofessional title but given then really snippy twitters those guys really are pissed...and tweeting that way. So far we have "two turkeys do not make an eagle" and a "Any Nokia software engineers need a job? We're hiring".



    This appears to be as good a deal for Nokia as it is for MS. MS intended to spend $$$ promoting WP7 and I guess part of that billions in value will be toward subsidizing Nokia ads or pushing Nokia. Then the huge discounts in software licenses essentially makes WP7 as free as Android for Nokia.



    Buying Palm would have been the better move but given that Apple probably put in a relatively high bid I'm guessing HP paid too much. But going WP7 looks like as good a secondary option as is left.



    Going linux IMHO really screwed them. Samsung's BSD/proprietary based Bada is far more likely to be successful given they can keep what they want proprietary as opposed to give all their competitors a leg up like with MeeGo/Maemo. If you need to tie other layers to the kernel tightly then GPL forces you to open all that stuff up too (sorta). By not going Linux Samsung can open source what they want but keep the key stuff internal.
  • Reply 9 of 62
    nhtnht Posts: 4,456member
    Quote:
    Originally Posted by bappo View Post


    Yes, qand they are saying: we are going to fire all our enginneers, that know nothing about microsoft technologies, because they are crap too.



    Nokia employers will live an interesting life next year.



    Good software devs can move from platform to platform without a lot of heartache. It's part of the profession.
  • Reply 10 of 62
    Competition is Good...



    Apple: Integrated HW/SW Model

    Microsoft: Fragmented HW/SW Model

    Google: Fragmented HW/SW Model



    ...but I'd rather have the Apple Approach....the customer experience is seamless.
  • Reply 11 of 62
    Quote:
    Originally Posted by RichL View Post


    This story has already been corrected in the press. The actual story is that Nokia will save billions by adopting Windows Phone.



    No. You're mis-represnting it here yourself.



    Money will flow both ways. MS will pay Nokia for the use of Ovni maps, Nokia will pay MS for the licenses for Windows Phone 7. Microsoft has also committed to offsetting the costs of development and any short term losses over the two years or so it will take to pick up speed.



    Remember Nokia is basically throwing away a world-wide, world-leading business here to take a bet on Microsoft. There is a very real danger that Nokia could go under as a company before it has time to develop any market for Windows Phones. That alone means that Microsoft is on the hook for billions due to it's promise to keep Nokia afloat and in the game while it switches over.
  • Reply 12 of 62
    melgrossmelgross Posts: 31,697member
    Quote:
    Originally Posted by anantksundaram View Post


    You don't say....



    Quote:
    Originally Posted by maccherry View Post


    If he is a Muslim from Kenya then why hell did the CIA. allow him into the white house? Oh and by the way Muslims are part of the federal reserve homey. So you better chill. Remember you ain't on the gold standard anymore.

    Troll.



    Quote:
    Originally Posted by zindako View Post


    Typical white male racist rhetoric, what are you afraid you're no longer at the top of the food chain, scared a black man can become president and has the intellectual aptitude that is superior to your peers? I bet you neve questioned bush nativity to thos country, oh let me guess. There was no such thing as native Americans, it was all made up and caucasions are the real natives of this land, I mean, you were all non immigrants and everyone else is not worthy of being called an American.



    And since when is the Islamic faith illegal here in the united states of America that has freedom of religion and several liberties engrained into it's history and philosophy.





    Quote:
    Originally Posted by Logisticaldron View Post


    This is why we need a sarcasm tag for modern textbased discourse. I?m pretty damn sure Superbass was being ironic.



    Quote:
    Originally Posted by steelraven View Post


    Or better yet Bush was the real terrorist to America



    Quote:
    Originally Posted by zindako View Post


    We don't need crap lines like that from superbass, the media already broadcast that junk from fox news everyday all day. I'm sure he truly believes that nonsense at the core of his being.



    I want all of you guys, and everyone else for that matter, to cut this out right now, or I'll remove all of your posts here. Is that understood?
  • Reply 13 of 62
    Throw copious amounts of money



    Gotta love Microsoft's solution to everything!
  • Reply 14 of 62
    boogabooga Posts: 1,077member
    Quote:
    Originally Posted by Logisticaldron View Post


    It?s simple. Nokia dropping Symbian for a symbiotic relationship with MS. This is best chance both of them have for getting a stable ground in smartphones. Elop is doing what Jobs did when he came back to Apple. Apple had a rubbish OS, too, and they admitted it.



    This is Nokia?s best move. WP7 is a good modern mobile OS. Nokia has HW knowledge but no SW chops so even if they choose Android, they couldn?t pull off a Nokia-esque UI or a vetted app store. They couldn?t even make it the best Android phone on the market since that will require driver knowledge which they haven?t shown to possess. So what other options did they have besides going down the same miserable path and not admitting that need to make changes?



    Maybe so. Just don't announce it.
  • Reply 15 of 62
    Quote:
    Originally Posted by allmypeople View Post


    Throw copious amounts of money



    Gotta love Microsoft's solution to everything!



    If they can corner a market the way they did with Windows, Office, and more recently, Xbox, it is very well worth it. I would rather bet on Apple's model of savvy business moves and an uncanny feel for the future of technology, but if you don't have those skills and your greatest asset is nearly limitless amounts of money, what else are they supposed to do?
  • Reply 16 of 62
    richlrichl Posts: 2,213member
    Quote:
    Originally Posted by Prof. Peabody View Post


    No. You're mis-represnting it here yourself.



    ... That alone means that Microsoft is on the hook for billions due to it's promise to keep Nokia afloat and in the game while it switches over.



    I'm not at all. Please listen to what Elop actually said, rather than to second-hand rumours.



    Quote:
    Originally Posted by The Register


    A wire report claiming that "Microsoft is paying Nokia billions of dollars to switch to Windows Phone 7" is equally ill-founded.



    What Elop actually said was that the "net benefit" of the strategy changes he announced would ultimately save Nokia billions. "The value transferred to Nokia is measured in billions not millions," he said.



    Value, not cash. If even The Register can get its facts right, anyone can.
  • Reply 17 of 62
    cmvsmcmvsm Posts: 204member
    A fool and his money are lucky to find each other in the first place. Microsoft is proving this every day with the type of poor business decisions that they are making. Are they thinking that they can somehow save Nokia by offering up an OS that hasn't done that great to begin with? Another anchor on that sinking ship is not going to provide any additional buoyancy.
  • Reply 18 of 62
    quinneyquinney Posts: 2,525member
    Quote:
    Originally Posted by AppleInsider View Post


    Elop was also asked if he's a "Trojan horse" for Microsoft, his former employer, to which he replied "No." He said the decision to adopt the Windows Phone platform was unanimous among Nokia's senior management.



    ...all of whom understood the wisdom of keeping their jobs.
  • Reply 19 of 62
    Nokia would be better off buying MS out. Then contract with Apple to develope a real mobile phone OS.
  • Reply 20 of 62
    dreyfus2dreyfus2 Posts: 1,070member
    Hm, any developer with some pride would rather pay for sex, than for somebody to use his software...



    What is the value of something like Ovi Maps? A service nobody wanted to pay for, so in the end Nokia was giving it away for free in most countries.



    Elop should be careful about throwing these huge numbers around... Nokia has enough enemies in the EU (since they collected a lot of subsidies for creating jobs in several countries, and then moved factories away) and MS is under constant watch anyhow... There is certainly more than one regulator (or competition watchdog) who would like to make this deal more difficult.
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