Microsoft is paying “billions” for its Windows Phone deal with Nokia, but hopes to earn that money back later from royalties on each phone sold.This morning, the two companies signed their deal, which was first announced back in February. Previous reports said that Microsoft would pay Nokia at least $1 billion for the deal.
But today’s press release puts the value higher:
“In recognition of the unique nature of Nokia’s agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars.”
Nokia will also receive additional payments as part of an intellectual property exchange.
Nokia’s VP of Microsoft Alliance, Waldemar Sakalus, said that there is “tremendous pressure” to deliver their first joint phone this year, but they don’t expect shipments in big volumes until 2012. In a March financial filing, Nokia said it doesn’t expect to complete the transition from Symbian to Windows Phone until 2013.
Here are some other details of the deal:
- Nokia will provide mapping, navigation, and location-based services. Presumably, these will use technology from Navteq, which Nokia bought in 2007 for more than $8 billion.
- Microsoft will provide Bing search services “across the Nokia portfolio” — in other words, not just to Windows Phones.
- Nokia will launch its own Nokia-branded app marketplace built on the Windows Phone Marketplace platform.
Nokia has said that it hopes to transition 200 million current Symbian users to Windows Phone. If that works out, Microsoft would move from also-ran to become the number-two phone platform in the market — some analysts have predicted it will overtake Apple by 2015.
Here’s the video of Sakalus and Microsoft’s Matt Bencke discussing the deal.