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iniewski
To yalanand, the deal is bad b/c Microsoft operating system in mobile ...
yalanand
Not sure why everyone is so pessimistic about the deal. I feel competition is ...
Report: Microsoft to pay Nokia $1 billion for support
Peter Clarke
3/8/2011 10:28 AM EST
LONDON – Software giant Microsoft will pay mobile phone company Nokia more than $1 billion to promote and develop handsets that run the Windows operating system, according to a Bloomberg report that cites two un-named sources.
Intel CEO Paul Otellini had hinted that Nokia had been paid to jump ship when he recently discussed the departure of Nokia from an alliance with Intel called MeeGo. MeeGo is a Linux-based open source mobile operating system targeted at a range of mobile devices.
Otellini said at the time that Nokia's CEO Stephen Elop had concluded that Nokia could not "afford" to stay with the MeeGo project after receiving offers to switch from both Microsoft and Google.
Under the terms of deal between Microsoft and Nokia that is due to run for more than five years, Nokia will pay Microsoft a royalty on each copy of Windows used in its phones. But the benefit will come in terms of the saving on software R&D, Bloomberg said. The final contract has yet to be signed, the report added referencing one of its un-named sources.
Related links and articles:
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agk
3/8/2011 11:16 AM EST
Microsoft and Intel are new partners.Nokia also was with Intel. Now Nokia is no moe with Intel.I feel a kind of triangular RELATIONSHIP.
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Frank Eory
3/8/2011 11:32 AM EST
$1B to get your OS adopted by Nokia is a great deal for MS. Not having to keep sinking money into yet another mobile Linux OS is a great deal for Nokia. Everybody wins, including consumers.
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Warren
3/8/2011 12:55 PM EST
Frank, how do you possibly figure that taking payment (that will be returned to MS via per-license royalties) to abandon an open OS and yoke to a proprietary one is a win for consumers?
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Frank Eory
3/8/2011 6:15 PM EST
If it gives Windows Phone 7 a decent share of the smartphone market -- real competition for iOS, Android and don't forget RIM -- then consumers will have more choices. Competition is always a good thing.
And if Nokia should be so lucky to sell SO many smartphones that MS gets back all of their $1B as royalties, then Nokia will have made a ton of money, acquired a significant share of the smartphone market, and will be 'back' as a healthy competitor -- which again would be good for consumers.
As for proprietary vs. open OS, consumers don't seem to care as much about this as engineers do :)
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Warren
3/8/2011 6:39 PM EST
Great reply. Your thesis then looks to be that Win7 didn't have much of a chance in phones without winning Nokia... and you may be right. The argument that having Nokia as a healthy competitor is a good one - thought of it myself but wasn't going to hand it over to you in advance :) ...and having MS pay dollars to Nokia and do [some of] their work for them certainly should help their health.
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rick.merritt
3/8/2011 12:10 PM EST
So much for Nokia's technical analysis of mobile OSes ;-) Both Intel and Microsoft allegedly paid PC companies special marketing concessions to use their processors and Windows back in the '90s.
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iniewski
3/8/2011 12:28 PM EST
I am not sure I agree Frank...throwing money after losing technology might not work although I agree that a billion dollars is nothing to snif at ;-)...Kris
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SallyF
3/8/2011 1:54 PM EST
Saving software development costs could be accomplished by moving to Android, without the enormous loss of profit due to paying Microsoft for each copy of Windows Phone 7. No. That doesn't explain the decision. Nokia's new CEO Stephen Elop OWNS STOCK IN MICROSOFT, for whom he is a "former" executive. Occams razor test implies that Elop made the decision to benefit himself at the expense of Nokia stockholders. Microsoft has already spent half a billion dollars marketing their outdated and poorly implemented phone operating system. Nokia will not benefit from this sell out by their traitorous CEO.
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rick.merritt
3/8/2011 5:32 PM EST
@SallyF: Wonder how Nokia engineers in the trenches feel about this story?
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iniewski
3/8/2011 7:20 PM EST
I talked to a friend at Nokia...the morale is very low, not a surprise...my prediction: this deal doesn't work, Nokia continues to loose market share, CEO gets fired in 2 years time...Nokia to start to re-invent itself in 2014 by going to its roots (original cell phone design not rubber boots ;-)...Kris
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Krutsch
3/9/2011 2:54 AM EST
This was a really funny post... But they really have to take care about going to the roots.. they might start producing paper again :)
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eewiz
3/8/2011 9:22 PM EST
@SallyF
The total worth of MS shares owned by Elop was ~3m$. Thats peanuts for these guys. The stock options given by Nokia to him will be atleast 10x that amount. And on top, he sold all his MS shares few weeks back after some idiots said similar things.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/02/18/businessinsider-nokia-ceo-elop-sells-all-microsoft-shares-buys-nokia-2011-2.DTL
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jubilee9r
3/8/2011 11:21 PM EST
Microsoft seems like a billionaire drunk with no idea of where he is going or how to get there. When he runs out of money he will lose his friends ending up destitute and lonely. Fortunately it will take a long time to go through all that money so their employees will have time to find another job.
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selinz
3/9/2011 8:52 AM EST
This will be interesting. The big advantage that they could have (not sure if it still works) is the integration with Office. Noone else can do that as nicely as Microsoft. Since a jillion people still use offce, it'd be nice to have a decent way to synch with outlook.. Android and iPhone users have to settle for patch solutions for this...
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yalanand
3/9/2011 9:22 AM EST
Not sure why everyone is so pessimistic about the deal. I feel competition is always good. There will be people who will get bored of Android and will switch to windows phones. Can anyone please explain why this deal is so bad ?
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iniewski
3/9/2011 10:10 AM EST
To yalanand, the deal is bad b/c Microsoft operating system in mobile applications is not efficient...this is not a problem in a PC environment as Intel supplies enormous processing power but is extremely important in a smart phone where resources are limited...Android was the right answer that Nokia could not get, maybe they should had used IBM Watson to reason that ;-)...Kris
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