back to article Microsoft 'paid Nokia $1bn' for WinPho 7 deal

Nokia's jaw-dropping decision to adopt Windows Phone 7 as its handset operating system was juiced by an equally jaw-dropping payout from Microsoft of over $1bn, according to a report citing people with knowledge of the deal. Bloomberg reports that Redmond will ship that $1bn to Espoo, Finland, in support of Nokia's efforts to " …

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WTF?

What the hell?

Who's running the show over there? Back in the day Nokia was the go-to, and now... just, wtf. buying symbian with incompetance, the whole Ovi portal debacle, and now this? they really have caught Microsoft fever. are they going to launch a search engine next?

1bill in capitol and god knows what in bribes for execs; losing 25% of your share value over a single decision? good look spinning that one for the board of shareholders, jumpin _jesus_.

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Stop

no search engine for Nokia

No search engine for Nokia, Microsoft will not let it.

Nokia will be marginalized by Microsoft, told what to do and restricted at every turn.

All Nokia can do now is make handsets. And it can not even move into the Android space. It would be much better off if it could. But, it is destined to fail along with Microsoft.

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Gates Horns

Who's running the show over there?

Erm, a Microsoft Exec perhaps?

Microsoft will purchase Nokia outright within 3 years.

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A One $Billion Turd...

...is still a turd.

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Yes but

Apparently in Redmond (or Finland) the fine art of turd polishing is alive and well and at $1bn that is going to be one very shiny steamer...

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Linux

Es poo a'right

It's full of poo.

Still love my N900.

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@Mr floppy

The N900 is a pretty good piece of kit, even if its only a first-generation Linux offering from Nokia. The idea (now canned of course) is that they would produce at least another two more generations of products, each more polished and with more capabilities than the last.

Its a shame really, I've always used Nokia phones and have never had a phone from another manufacturer. However that comes to the end at my next upgrade (start of 2012) - am currently thinking about getting a Blackberry.

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Terminator

Do not blame Nokia for all of Espo

Lovely town (it's been a few decades since I have been there). No point to tar brush it this way.

In any case, Nokia Smartphone shipments are presently at about 10-15M per year. Assuming it sustains it this ends up over 5 years as a 50% discount on the Win7 license. I do not see Samsung and HTC tolerating that. Especially Samsung. They have a long history of playing hardball with OS and IPR suppliers and they do not hesitate to show someone the door and do it in-house if they feel like it.

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Boffin

Now the truth about the deal starts coming out...

"Two other tidbits in the sources' tattling make more sense, however. One is that as part of the deal, Microsoft will get access to Nokia's patent portfolio, and the other is that Redmond will gain the right to leverage Nokia's Navteq mapping technology to support location-based advertising.

"

Everyone thought it was about the OS.

Clearly there's definitely more to the deal than meets the eye. ;-)

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Smart, if unwelcome

From the OS perspective, that seemed like a bad move for Nokia at the time. Apparently they got more than initially met the eye. MS is still the big winner here, they bailed out of the trouble that Nokia's massive patent portfolio can bring upon whoever annoys them (see Apple), and they got to dish their OS out to the masses (plus that geolocation thinggie, which is always nice when you try and throw office chairs at Google). That should buy Ballmer some time, his seat was getting quite hot whenever the "i" word was mentionned, as I understand.

Nokia are not losers either, the traction they lost in the consumer market by not going Linux, they'll probably win back by setting foot in the corporate market (they still lose the last shreds of coolness they might have managed to cling to, but you can't have your cake and not be hungry anymore, too). Right, they lost stock value. Well, they were going to, sooner or later: they were in a dead-end anyway; and they pitted themselves against Apple in a patent dispute that will likely last for the best of a decade (if not more), so MS' support must feel reassuring (sweet, sweet embrace... sorry, I digress).

But unless Nokia's maket cap. dips so low that MS decides to take them over entirely, I can't see that as anything else than a very temporary alliance. I can already see whoever first feels they don't need it anymore ditch the other as a hot potato (chances are that MS will attempt to bite off a hefty chunk of Nokia's property and run away with it. They kinda have a history).

I've been wrong before, though.

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Paris Hilton

What property does Nokia have?

> chances are that MS will attempt to bite off a hefty chunk of Nokia's property and run away with it

MS already got a patent license.

Nokia doesn't have any copyrights that are worth anything. (They have lots of copyrights to software, but as part of the MS-Nokia tieup they're going to stop using their own software and use MS's software instead. So they obviously think their own software is worthless).

The Nokia brand (trademark) is worth something, but that will be dealt with by the rise of the OS brands. If I wanted a phone now, I'd look for an Android one, I wouldn't be looking for a particular manufacturer.

What's left to take?

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WTF?

@AC

Clearly you didn't read the article.

Or rather if you had read the article you wouldn't understand the significance of the deal.

Its more than just an OS deal.

Also, while Win7 takes the front seat, what makes you think that Meego is dead? ;

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Stop

Ah, yes. I forgot the title. Silly me. :D

Nokia have a huge pile of low level patents, related to GSM, antennae and signal processing.

Basically You would be hard pressed to make a GSM transmitter without stepping over Nokia's patents.

That is, if I remember correctly.

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Meego, the Qt connection

@Ian McTroll Gumby: "what makes you think that Meego is dead?"

...selling the entire Qt software biz Meego relies on was a MASSIVE clue...

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Flame

trust me

>what makes you think that Meego is dead?

As a slight insider let me tell you Meego off the netbook is garbage. If the OS has to rely mostly on Intel software people I would say permanent life support as opposed to straight up dead. Intel is surprisingly bad in the embedded space these days software and hardware.

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FAIL

Think Different...

I keep on seeing that twaddle about nokia being unable to stand out from the crowd with android. This is opposed to Windows Phone 7 where there are very strict rules on the hardware, on the buttons on the phone and on the homepage of the device, meaning that nokia are pretty much forced into producing the same hardware as everyone else, with a slightly different cover and a small tile on the front screen(and I do mean small). I mean with android there are rules about what hardware is required, what buttons must be where and as far as i can tell you can just slap your own UI on it.

So out of the two OSs basically the only OS where you can stand out from the crowd is android. I hope Nokia enjoy there 1 billion as there market share in 5 years will prolly be somewhere around the size of the employees of microsoft plus the employees of nokia.

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Coffee/keyboard

Not so..

Nokia will have the ability to stand out from the crowd more than any other WP7-using manufacturer. They will have native code, and they could have a custom interface.

My bet is that each party will have end-to-end responsibility for their parts of the system, focusing on their strong-points. This will probably mean that the interface doesn't change too much.

I wouldn't be surprised, however, if WP7 developers end up taking over much of the frontend work for the Maps application (backed by Nokia libraries and web-APIs), with Nokia focusing on the backend and the all-important point of interest databases and maps, and the challenges that they pose and at which Navteq in particular excels. Microsoft has done some amazingly good integration work, and the last thing end users want is an app that doesn't integrate - location based services are too important nowadays to not integrate well. Azure may become a target for backend work in the years to come, as the profile of the developers change.

I think many many people are devastated that Nokia's all-but-abandoning its Linux ambitions (rumour has it that Meego may appear on mid-range Nokia phones in the future, but it's hard to imagine this succeeding without serious marketing efforts - probably throwing the community a bone), but I think the share price of Nokia would've been hit far harder (and rightly so) if they went the Android route.

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Where's the crowd?

I think the point is that there isn't really a WinPho crowd. And the deal with Nokia pretty much means there won't be.

All the other WinPho licensees already have Android, and have already invested rather more in Android hardware, so where is their incentive to create WinPho devices and go up against Nokia? Particularly when Nokia have an (apparent) head-start and closer ties with Redmond.

So, a couple of years from now, Nokia /will/ be the WinPho crowd; and HTC, Samsung, LG, SE and a whole host of cheapo Chinese companies will desperately trying to differentiate in a crowded Andoid marketplace.

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Stop

making handsets if fine

Making handsets is fine. But, going with only one OS is a huge mistake.

Just look at the handset makers out there in the marketplace. Many have Android AND Microsoft. If you are out of the software business it makes no sense at all to focus only upon a loser OS. Even if you are paid a billion to go down.

Microsoft needs Nokia badly. And that is why they coughed up the money. Nokia might benefit from signing on with Microsoft. But, an exclusive move is suicide.

Nokia will not be permitted to differentiate from other Microsoft phones. Microsoft has never permitted that. It would be like signing on with Apple. No idependance at all.

The only handset makers with any degree of freedom or being able to use differentiation will be offering Android.

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Boffin

@AC re: Not So...

Seems someone actually understands the significance of the deal.

Getting down thumbed by the commentards seems to be a good thing these days.

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crowded Android marketplace

The Android marketplace will be crouded. But, it will also be differentiated.

As market conditions dictate. Some Android sets will continue to focus upon consumer phones. Some Android sets will focus upon the enterprise. And the Android market as a whole will benefit from the absense of a bunch of idiots trying to control everyone else (Apple, RIM and Microsoft).

All of the egos in the industry just assume they have the best solution and try to impose it upon everyone else. But, they are idiots.

Android will dominate simply because it is not being manipulated for the purpose of controlling others.

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What the hell

When I see this "There's going to be joint go-to-market opportunities. And obviously both parties are aligned, and we think this has great long-term financial opportunities." I think of a word beginning with W. Prefixing marketing with `go-to-` is pointless and indeed marketing what - all we know is Opertunities. Then the next sentence it's basicly saying nothing beyond being aligned and Profit. So what's the plan exactly here: Opertunities ?????? Profit.

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Welcome

And so it begins...

Here's a billion, forget all that silly "Open source" stuff, and let our corp frolic amongst your patents. And while you're at it, sell that silly QT to one of our more trusted partners, Digia.

http://www.digia.com/C2256FEF0043E9C1/0/405001965

I wonder who's going to be buying out what's left of Nokia in two years time?

(The welcome mat, because Nokia's obviously welcomed in their new overlords.)

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@Captain DaFt

Good thing is, even if Microsoft's rent boys in Digia try to play games with Qt's licensing, because its currently under a GPL (or LGPS - I forget which) license, people who use the toolkit (I'm think of the KDE project) will simply fork it. Digia/MS can't sue them for "patent" violations because of the license.

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Stop

Re: playing games with Qt's licensing

If anyone tries that, then QT gets open-sourced under the BSD license. Then anyone can do whatever they like with it.

There is a "KDE Free QT Foundation" that was set up for just that purpose. Nokia gave it the right to relicense QT, should Nokia stop developing it.

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Silver badge

True that

QT can fork, it's dual licensed. But the commercial license is now under Microsoft's thumb, and that's where the profits are.

And with Microsoft able to wave a big patent stick around (Thanks to Nokia letting them into their portfolio.), do you think many businesses are going to switch to the forked version?

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Gates Horns

Who's the winner?

Well, let's see, that would be guaranteed cash from M$ to Nokia of $1Bn over 5 years, Nokia *might* get to claw back smartphone market share and therefore get new sales revenues on their hardware plus they *might* get some ad revenues versus about 25% loss on share value at about $6Bn, plus loss of the sunk-cost of R&D and net present value in Symbian, MeeGo & other software, maybe $65Bn according to estimates floating around various blogs.

On the other hand, MS get guaranteed licensing for every Nokia smartphone WP7 OS sold, access to a huge patent portfolio, access to a good mapping/geolocation application and some other pretty good mobile software, no hardware development costs, a smallish share value increase worth maybe $1Bn and maybe future ad revenue, versus said $1Bn to Nokia over 5 years.

Seems to me to be a pretty damn good deal. For Microsoft. And maybe for Elop depending on how much he got paid...

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Gates Horns

Yup...

As the saying went "Shake hands with Microsoft, better check that your arm is still attached."

1 billion USD over 5 years may not even be that much. In 5 years, the whole US monetary base might just be worth a cheeseburger with freedom fries on the side.

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Title.

Ad revenue is dependent on units sold. And that requires them to be sold in the first place. Winpho isn't great, it is locked down and trying to compete with Apple in a race it is 3 years behind. It has no unique selling point of worth and so what exactly is projected as sales? When M$ actually release units sold and in the hands of customers then people could make estimates to profits.

Until then I can't see them making profits of anything near the money talked about.

Given the N900 is a show of what Nokia development is, I don't hold out for a winpho phone of worth from Nokia anytime soon and there certainly won't be an iphone killer or something to beat Android until 2012 at least, but by then everyone else will have moved on.

It really is 2 'also-rans' in the high end smartphone market arguing for the scraps. China does it cheaper, everyone else does it better.

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Shades of Sendo Corp

So when the last fork is stuck in the NoWin corpse guess where the patents wind up... take your time.

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Silver badge

Re: Nokia's shares have shed over a quarter of their value

Well that's because no one wants a Windows7 phone.

I'm certainly not going to be replacing my E72 with a phone running Windows, $1B must be nice, but no customers isn't going to help them

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Paris Hilton

We know what you are...

... all we're doing is haggling over the price. I guess if you've got to be a whore, $1B is a nice tidy sum to do it for. Really glad I bought a Motorola Droid over the N900. Really sad my N800 is in a bag.

Paris because maybe she can give Nokia tips on "the business"

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Unhappy

Eh...

I'm glad I bought my n900. It was worth it then, it's worth it now. Just a shame there's not going to be any future upgrades.

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Anonymous Coward

Short term money grab

Nokia SHOULD be trying to be as popular and profitable as Apple, i.e., several billion $/year profit. Grabbing $1B like this should be a secondary concern to making the correct strategic decisions. The fact that this money comes into play and is influencing decisions means to me that the executives don't honestly believe in their company's long term viability and instead are blowing smoke up each others' asses and just want to grab a share of that $1B and run.

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Anonymous Coward

Patents

I wonder what they mean exactly by "access to Nokia's patents"... Isn't Nokia locked into a patent dispute with Apple, with a decision yet to come from US judges?

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Linux

Access to Nokia's patents means...

...that Nokia and Microsoft can pool their patents into a larger pool, and attack & defend on both the hardware and software fronts. And while there's a large corner of hell reserved for patent trolls, it is such a vital part of the US IP industry (making and breaking companies), that it makes excellent business sense.

Perhaps more importantly, and this is probably where Microsoft is getting its $1bn worth more than elsewhere, is that Google doesn't get access to Nokia's patent pool. Google's may try to do good and not be a typical patent licensing company (at least to the public eye), but it sure would help them to have more protection from patent disputes.

Nokia will also gain ad revenue from the deal - so far, they haven't had any real advertising platform.

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Isn't...

... everyone doing business in the US locked in a patent dispute with everyone else.

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Bronze badge

and in

the UK, Germany and Netherlands.

http://www.bbc.co.uk/news/technology-12010872

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Linux

re: Isn't Nokia locked into a patent dispute with Apple?

Don't you think Microsoft would like them to /stay/ locked in patent disputes with Apple? MS poured cash into SCO to pump that action for all it was worth ...

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Flame

Was the $1,000,000,000

given to Nokia's Shareholders or the Company's Board?

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Anonymous Coward

Was the $1,000,000,000

reported in any earnings figures? Investors seem to be unaware of it, or maybe think the net effect of $1bn combined with a slide in future earnings tied to the new strategy is a negative one. And if it's not on any filing or report, Inspector Knacker of the Helsinki/London/<insert trading location> yard will be interested to learn more about it.

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Silver badge

probably mapping service prepayment

I find the careful avoidance of any claim of hard payments from either Nokia or M$ noteworthy, Elop in particular sticks to 'worth XXX$' to Nokia. We know one huge chunk of 'worth' was reductions in their R&D budget, suicide masquerading as cost cutting.

One likely possibility is the $1b is a structured minimum licence payment or advance on actual sales, not a straight payment and also likely to have all the legal trickery that brings. We worked out on day1 that Nokia's only actual benefit was the licence revenue M$ replacing its mapping support with Nokia's would generate. The mapping app overlap with Google Maps was blamed for Android not being adopted.

That licence fee has a downside: companies may prefer to drop WP7 rather than subsidise a direct competitor. If the $1b really is an advance Microsoft could easily come out of this owning Nokia's map tech, if WP7 fails.

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Go

sunny with chance of flying pigs

Give Nokia and Microsoft some time to execute on this deal. Granted, behemoths like those are not well known for their speed or excellency of execution. And yet, Microsoft has managed to deliver WP7 that is not just a me-too product. It is innovative, well thought-out and feels genuinely different from iOS or Android. So it's pigs flying time and maybe Nokia+Microsoft will manage to give the Apple & Google world some solid competition.

The assets are there. Microsoft has a solid smartphone OS and even a decent app portfolio. The OS has some bits lacking like multitasking and a real-time kernel to be able to run the phone radio on the same chip as the rest of the phone. However, nothing a couple of of competent software engineers cannot solve. Nokia on the other hand knows how to make phones. They have a massive industrial design and manufactionring operation in place and their brand is not that bad.

With this deal, Nokia will be the #1 WP7 maker and most probably the only one in the long term and that is just what they need: an genuinely different and innovative operating system that is exclusive to Nokia phones.

So I do see how this makes sense. If Apple and Google look at the cards Nokia+Microsoft have in their hands, they have reason to be afraid.

Now the real question is: will Nokia+Microsoft be able to play those cards smartly and win. Oh look, there is a flying pig above the building over there !

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JDX
Gold badge

re: Think Different

>This is opposed to Windows Phone 7 where there are very strict rules

>on the hardware [...] meaning that nokia are pretty much forced into producing

>the same hardware as everyone else

You realise this is wrong? There are strict MINIMUM specs.

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If you can't beat 'em...

Pay them lots of money to push your product.

Has anyone done a study into the stages of death of a company?

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One Billion Reasons Not to buy Microsoft/Nokia Ever again..

Money well spent? Hardly! its all back scratchers, and pork rind.

I think I'll stick to suppliers that are likely to provide good value for money, where the money flows in the right directions. and is spent on inovation and development, not 'business deals'.

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Anonymous Coward

Won't matter.

"In addition, one of the chatty tipsters noted that the payout was a bribe inducement to keep Nokia from selecting Android as its go-to mobile OS." That just consigns both Nokia and Microsoft to the history books.

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WP7

i'm loving my WP7, by far the best mobile solution out there!

iphone - how can anything be considered 'cool' when everyone has one is beyond me. And exactly how many farting applications do you want/need?! i consider these human purchasers as sheep. iTunes, with it's lovely 128k (or if you're lucky 256k) music - Apple is spoiling you with high quality products, eh!?

android - good luck in the future with this slightly too open OS - i'm sure we'll see a ton of malware/viruses spring up, autodiallers and £10 text messages for the user to cope with. The lack of fit and finish of android makes it feel scrappy and not polished. i'm sure the uber-geeks love it as they can make abacus apps and binary counters.

the 1BN investment from MS to Nokia should give a very good alternative to some of the crap already leading the way...

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Ok...

So you like WinPho7. Great for you. I don't, and don't consider it the best platform out there. That's purely subjective, and I never deny people points of view on subjective matters.

So, how can iPhones be cool when 'everyone has one' (by everyone, I assume you mean a significant segment of mobile phone users, not everyone as in everybody, mobile phone user or not)? How can surfboards be cool when all the surfers have them? Hmm.. Conundrum. Could it be that 'Cool' isn't related to how many people use something? I use mine as a dive log, gas mix aide memoir and weather checker. No fart apps in sight, and it does what I want. I rip my own CDs to whatever quality I like, and don't buy through iTunes. When I first purchased one, I did a spec of what I wanted on a phone, evaluated all the possible candidates, and settled on the iPhone as being a little more of what I wanted than the other candidates. If this approach is being "a sheep", so be it. I call it getting what I want, and what works for me best.

Android: Weird that most of my non-tech mates use Andriod, and love it (subjective opinion there is that it's highly polished, and well integrated, completely contrary to your opinion). You have an open store, which is subject to this malware, but there again, any 'unmoderated' app store is subject to the same. All phones will likely be subject to malware, with attack being based on the share of the market they've obtained (Android, being successful will be attacked a lot. WinPho, assuming it remains an 'also ran' will not be attacked so much in probability, though it's likely just as vulnerable).

All in all, you seem to be saying "This is my subjective opinion and speculation, therefore it's fact". It's not.

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