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Microsoft paid Nokia $1 billion dollars for Windows Phone 7 deal

Microsoft paid Nokia $1 billion dollars for Windows Phone 7 deal

Whoever said the Microsoft has more money than God must have a seriously good case, as reports come to light of the software giant agreeing to pay Nokia $1 billion (£600m) to get onboard its Windows Phone bandwagon.

According to Bloomberg, the deal, which is yet to be signed, will see Espoo being paid huge lumps of cash over the next five years to make handsets running the Windows Phone 7 operating system.

However, the Finnish smartphone maker will still have to pay Microsoft a license fee for each WP7 device sold, so a sizable chunk of the cash will most likely be recouped, if it is able to sell handsets in the volume Microsoft hopes.

The Redmond-based firm will also reportedly gain access to Nokia’s patent portfolio and be able to utilise its Navteq technology for location-based advertising.

The large financial incentive sheds some light as to why Espoo snubbed Android. Its share price has already fallen almost a quarter since the announcement last month and it will be desperately hoping the risk it has taken will pay off massively in the long term.

Microsoft has already spent some half a billion dollars marketing the WP7 platform and has had moderate success, but nowhere in the region that it needs to order to compete with Google’s OS.

Bloomberg Businessweek

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