Microsoft is said to pay Nokia more than $1 Billion in deal

[Papito]

In one of the most brazen corporate raids in history, Microsoft ( MSFT ) took everything of value from Nokia ( NOK ), and have left a wounded beast to die in the cold. As a bonus, they also crippled one of the more promising open source projects out there, and got paid to do it. The mainstream media is curiously absent in reporting what actually happened, the only detail that emerged worth a headline and sound bite is that Microsoft is paying Nokia $1 Billion as a sweetener . Like the rest of the deal , this is PR spin for public consumption. While technically true, it basically lying with numbers. Nokia doesn’t actually get a cent over the term of the agreement, and at least according to what sources tell SemiAccurate, Nokia is actually getting a worse deal than HTC, Samsung and the others. Remember when we said that no one pays for Wince Phone 7 ? Well, it is true, MS is so desperate for anyone to care about WP7 that they will pay you to make phones with it. If you have the capability to churn out anything that hooks up to the GSM network, MS looks pretty good. The only problem comes when you want to sell those phones, the buying public is a little more discerning that Microsoft expected. If you look at marketshare numbers, MS’s overall installed base in phones has been cut to about a third of what it was a year ago. WP7 has not only failed to stem the bleeding, it is getting steamrollered, ongoing market segment share is down from a year ago, before WP7 shipped. Ouch. MS is spending vast wads of cash to only lose 60+ % of their admittedly meager base, numbers well hidden by their refusal to break out balances for the phone division, it is curiously lumped in with the Xbox cash flow, obliterating any hope for clarity. So, the savior OS, WP7 is now bleeding both cash and marketshare, getting all the press attention of an esoteric political speech, and unlikely to ever attain even market.

 

That brings us back to Nokia and MS. Nokia is getting more than $1 Billion to dump Symbian and/or not move to Android. Fair enough. For the sake of argument, lets just say that WP7 ‘costs’ $10/phone to license, and MS kicks back anyone using it $15 /phone in ‘bend over, smile, and think of the queen’ money. Sources tell SemiAccurate that these numbers are very close to what MS is shelling out, but we were asked to keep more exact numbers private to avoid identifying sources. If you look at the numbers of smartphones shipped by Nokia , most of the numbers are pretty close to the ones quoted by Ars Technica , about 30 million units a quarter. Lets say Nokia loses a bit of marketshare because of the deal , and in 2012 only ships an average of 25 million WP7 or WP7. x phones a quarter, 100 million for the year. If each of those costs Nokia $10 , Nokia is paying MS $1 Billion /year in licensing. MS kicks back $15 /phone, or $1.5 Billion to everyone else, so if MS paid HTC/Samsung rates to Nokia , the Finnish company would have made that proverbial $1 Billion after 2 years by simply using the MS OS on over the counter rates. With the current setup, after 2 years, MS makes their $1 Billion back, and then Nokia is bleeding money. If you look at the Businessweek article that first mentioned the $1 Billion number , there are two operative quotes. The first is that “ Microsoft Corp. will pay Nokia Oyj more than $1 billion to promote and develop Windows-based handsets as part of their smartphone software agreement, according to two people with knowledge of the terms”. Great. Then a bit farther down, there is this quote, “Nokia’s royalty payments will help Redmond, Washington- based Microsoft make a profit on the accord even after the payments to Nokia, one person said.”

[Vanaraud]

Few years in the future: every mobile phone uses WP7 which is full of viruses and needs restarting after each call...

Sounds quite familiar but in different platform.

[Papito]

Few years in the future: every mobile phone uses WP7 which is full of viruses and needs restarting after each call...

Sounds quite familiar but in different platform.

you think so, i think that the end Android will conquer the market.

[daredevil]

you think so, i think that the end Android will conquer the market.

 

Android will never end. Android is getting better and better.

 

Nokia, made wise move. Either it was Symbian or M$. Symbian was not working well according to last stats and it was wise move to join hands. I always liked Nokia phones to be honest and hack even there Symbian OS. But to compete against iOS and Android, I think M$ OS stands better chance then Symbian.

 

Also, there are virus hits for iPhone.

 

http://www.tomshardware.com/news/iphone-virus-botnet-bank-details,9136.html

 

You will see more Virus, Trojan, Spywares, etc for OS X, once the market share of it reaches above 20%. AFAIK None of business entities in US/India except Apple uses OS X at there work.

 

I personally never had any virus issue since last decade. Norton or McAfee always took care of it for me.

[JoeDirt]

We spent more then that on our last office party.

[gaoesa]

The way I see it, Nokia needed someone who can make Operating System good enough to challence the iPhone and Android. Microsoft needed a phone producer who can produce high quality phones for big market shares.

 

However, if this does not work, you can expect Nokia will change everything very fast. It has done it in the past and is known in here (Finland) for making huge strategy and product changes to please the markets within weeks. Therefore, I expect that if the MS deal will not turn into profits, it will make Nokia change the products again.

 

Also, MeeGo is not dead. Though it was never alive either. Nokia has made substantial offers to increases MeeGo developer payments so that they won't leave the company because of the Microsoft deal before the new strategy is ready.

 

The Symbian products will continue in the Nokia production as long as it is profitable.

[Thoracic]

I think once you factor in Nokia’s cost savings on R&D it is a profitable move by Nokia. In 2010 NOK spent approx $3B Euros ($4.1B USD) in R&D and assuming it cuts 1/3 of R&D costs over time it would be another $1B+ USD which would boost Nokia’s income.

 

The 1/3 cut is an estimate by Sami Sarkamies, a Helsinki-based analyst with Nordea Bank.

[Papito]

We spent more then that on our last office party.

Rofl

 

Dare, so if i would get a phone it will be one based on Android instead an iPhone?

[JoeDirt]

Rofl

 

Dare, so if i would get a phone it will be one based on Android instead an iPhone?

 

Nah get WP7 Android and Iphone are ridden with problems and its only gonna get worse.

[Papito]

Nah get WP7 Android and Iphone are ridden with problems and its only gonna get worse.

lil bit late but, really, i heard before than wp7 sucks, i really don't know why but that's what i heard, i really like my nokia but we need(specially Mexico) more new market.