Microsoft and Nokia finalize their Windows Phone collaboration agreement

Microsoft and Nokia finalize their Windows Phone collaboration agreement

Summary: On April 21, Microsoft and Nokia signed off on the collaboration agreement the pair announced in mid-February.

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On April 21, Microsoft and Nokia signed off on the collaboration agreement the pair announced in mid-February.

The two haven't been standing still since the billion-dollar-plus deal was unveiled on February 11; they were working under a "non-binding term-sheet" while the top brass nailed down the final details of the agreement.

In today's press release, company officials from Microsoft and Nokia stressed that they've made "significant progress on the development of the first Nokia products incorporating Windows Phone." The release said there are "hundreds of personnel already engaged on joint engineering efforts, the companies are collaborating on a portfolio of new Nokia devices," and that "Nokia has also started porting key applications and services to operate on Windows Phone and joint outreach has begun to third party application developers."

The emphasis on speed runs somewhat contrary to the statements in Nokia's 20-F, which it filed with the Securities and Exchange Commission in mid-March. In that document, Nokia officials said the transition to Windows Phone as its “primary smartphone platform” will take “about two years" and that 2011 and 2012 would be transition years.

The final terms of the deal that were itemized in today's press release don't seem to include any big surprises.

Nokia will contribute its mapping, navigation and certain location-based services to the entire Windows Phone ecosystem. Nokia also will be contributing its expertise in imaging, hardware design and language support to help drive Windows Phone. Microsoft will provide Bing search on the Nokia devices, as well as various productivity, advertising, gaming, social media and other services across Nokia's devices. (There's no mention of Bing Maps in today's press release. Microsoft officials told me recently that Microsoft and Nokia planned to combine their mapping platforms on Windows Phone. I've asked again as to how/whether Bing Maps will figure on Windows Phones, going forward.)

Update (4/22): Here's what Microsoft is saying regarding the future of Bing Maps, courtesy of a company spokesperson: "Bing Maps has utilized Nokia content for road data, geo-coding and routing services for several years, through Nokia's Navteq vector data business, relying on the quality of its data for core location services. The Nokia/MS partnership will enable deeper collaboration in the future."

There will be a Nokia-branded unified global app store that will be built on top of the Windows Marketplace infrastructure, where developers will be able to publish and distribute their apps and services for Windows Phone, Symbian and Series 40. Nokia will be helping with operator billing.

There were no further details in the press release as to what Nokia will be allowed to alter on the Windows Phone chassis or UI which other phone OEMs will not.

Microsoft will receive undisclosed royalties from Nokia for licensing of the Windows Phone platform. And Nokia will "receive payments measured in the billions of dollars" from Microsoft for its various technologies and committment to the Windows Phone platform. Microsoft also will receive "substantial payments" for unnamed intellectual property cross-licensing deals.

When I met with Windows Phone General Manager Matt Bencke at Microsoft's recent Mix '11 conference, he told me that "Nokia has more IP (intellectual property) than any computing device maker." He said they have "great IP on cameras, lenses, hinges and all kinds of industrial-design (features)."

Bencke also emphasized the advantages that Nokia's sourcing and retail expertise will bring to the Windows Phone platform.

The size of their supply chain "lets them source with good terms from multiple providers," Bencke said. And Nokia's established system-on-a-chip know-how "will be really big for (achieving) lower price points" with new Windows Phones, he said.

Topics: Windows, Collaboration, Microsoft, Mobility, Nokia, Operating Systems, Software, Telcos

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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35 comments
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  • people will boycott this unholy alliance

    Nokia will lose because the people demand Android.
    Linux Geek
    • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

      @Linux Geek People demand Android because it's not Apple: http://news.cnet.com/8301-17852_3-20055181-71.html
      ian.aldrighetti
    • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

      @Linux Geek

      Does Linux have an app that automatically posts a pro-Linux, anti-everything-else comment to any blog post regardless of topic? If not, that should be a good opportunity for someone - if every desktop Linux user buys it, that should let the programmer live like a king right up to this weekend.
      1DaveN
      • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

        @DaveN_MVP If there is such an app, I don't have it installed on my openSUSE Linux 11.4 installation. In fact, I am anxiously awaiting the first Nokia/Microsoft smart phone (and holding off on buying any smart phone until one appears). The world's biggest phone maker meets the world's biggest OS maker... one in search of an OS, the other in search of hardware. It's like peanut butter and chocolate - an epic combination meant to be together!
        jgm@...
  • That sounds ...

    ... great! Regarding advertising, if MS can bring great user experiences to ads in WP7, it will definitely contribute significantly to the WP7 ecosystem. Also, don't celebrity endorsements work? If MS had beauties like Megan Fox, Olivia Munn, and maybe Kim Kardashian (maybe also some male athletes) showing off, and endorsing WP7 products in commercials, I think that will go a long way in promoting the platform.
    P. Douglas
    • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

      @P. Douglas In your business plan, 100% of Nokia/Microsoft phone users end up being straight men and lesbians. :-(
      jgm@...
      • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

        @jgm@...

        Actually a lot of ads that target women, feature women. E.g. cosmetics, personal hygene, and clothes. Therefore having women endorsing and pitching Windows phones, can easily appeal to both straight men and straight women. Even sexy ads like those from Victoria Secret, appeal to both straight men and straight women.
        P. Douglas
  • The should merge

    Seriously, Microsoft needs to really have a phone where they can really control the entire experience. I am not sure how this collaboration will pan out, but I hope for the best. Its just that with these large companies, bureaucracy tends to win out most times.
    Mr. Dee
    • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

      @Mr. Dee Unfortunate but true, large generally means slow.
      hayneiii@...
  • They're giving away maps too?

    "Nokia will contribute its mapping, navigation and certain location-based services to the entire Windows Phone ecosystem."

    Why?

    TomTom put Navigation onto iPhone, they didn't GIVE it to Apple. Why does Nokia need to give away it's commercial advantage in this non exclusive deal?
    guihombre
    • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

      @guihombre Non-exclusive? Nokia gets to "do things" to Windows Phone OS that others cannot... That sounds exclusive to me.
      ian.aldrighetti
      • Non exclusive

        @ian.aldrighetti,<br><br>Sounds like they contribute maps and EVERYONE licensing the Win Phone platform gets them. I believe this is what he's saying with "to the entire Windows Phone ecosystem".<br><br>It sounds like they contribute changes to Win Phone and that those benefits are available to everyone. Saying they get to cooperate doesn't mean they get exclusive rights to the gains MS makes from the cooperation.<br><br>It sounds like he's sold the app store to Microsoft, i.e. they lose their 30% cut of app sales.<br><br>I suspect, Elop has structured a deal where Nokia get a big lump of cash in the short term, for 'IP', and in exchange for loss of advantage, loss of revenue from the Apps store, and undisclosed platform costs repays those revenues in the long term.<br><br>Did Nokia's board give him a big bonus for a quick recovery in share price??
        guihombre
    • No...

      @guihombre Nokia didn't give anything away. Microsoft paid them billions of dollars for what they're bringing to the table.

      Also, TomTom is an app you have to download. The integrated maps in iPhone are google maps.
      d20dad
      • That's my point

        It looks like a short term cash boost to Nokia's bottom line in exchange for a long term loss of advantage.

        It's presented as a partnership, but if Nokia is receiving $1 billion NOW, in exchange for $1 billion+ in licenses LATER with (loss of its assets to boot) then Elop has set them up for a short term share price boost.

        So now I'm really interested in the deal the Nokia board offered him to see if it rewards long term gain in company value or a big bonus for a short term share price boost.
        guihombre
      • guihombre, long term loss and advantage

        @guihombre
        You'll say anything as long as it's anti-MS.
        Long term gain is what is predicted, or the board wouldn't have approved it.
        You have to take off your blinder, guihombre
        Will Farrell
      • @Will Farrell, Look at Samsung for an example

        Will,
        Compare Nokia vs Samsung, Samsung also make a WP7 phone.

        They will get Nokia's maps as part of this deal, they will get the store too, they will get any benefits from Nokia's code into WP7.

        And they didn't need any kind of weird deal with MS, didn't need to hand over anything, and didn't need to give up with their own platform to do that.

        So if Nokia wanted to go with WP7 they didn't need to lose their Ovi maps advantage, or give up their platform, or IP or anything else. They could have just licensed it like everyone else.

        I'm also wondering if the switch to MS app store means that Nokia is giving Ovi Store to MS, and losing the 30% apps margin it makes on sales (that's worth about 600 million to Apple I think).

        As to whether it's good for Nokia because the board approved it, the same board presided over years of neglect within Nokia, I don't accept the board's choice as a definition of what's good for Nokia.
        guihombre
      • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

        @guihombre - hold on there, you're choosing to omit a number of factors here:

        1) Microsoft invested a couple of billion in Nokia to help Nokia fund all the training, education, skilling, tooling changes, new product, hardware and software engineering changes that Nokia will need to do to switch to use the new phone platform.
        2) Nokia will, in exchange, get access to a brand new phone platform with much better future prospects than Symbian/MeeGo had.
        3) Nokia will get a significant cut of revenues for Nokia-specific content on the marketplace and a good cut of revenues from general WinPhone app sales.
        4) Nokia gets to differentiate itself from the myriad of me-too Android handset vendors with relatively little to differentiate themselves from one another.
        5) Microsoft gets a powerful partner agressively selling their new phone platform. Remember, in many countries, Nokia is essentially the carrier's operator providing provisioning, billing, software delivery and servicing as a package that network carriers re-sell to customers.

        This truly is one of the best win-win business deals I've seen in quite some time.

        Will it result in MS buying Nokia? Perhaps. But even if not, both parties will benefit enormously from this deal.
        bitcrazed
      • ...

        @guihombre What are you talking about? The sale of Nokia handsets with WP7 IS the longterm gain. Nokia maps is an excellent piece of software, but without an OS to integrate it with, it's pretty much worthless. On the software side Nokia is providing a few very good (and very key) bits, but MS is still doing the majority of the heavy lifting.
        d20dad
      • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

        @guihombre Without the Microsoft deal, Nokia had no long term anything. Remember Elop's "burning platform" memo. With no feasible smartphone OS at hand despite industry-leading R&D spending and Android inching its way into Chinese bargain phones, Nokia was surrounded on all sides by flame. If they stayed on the burning platform they'd be roasted. There was no future for Nokia without immediate action.
        jgm@...
    • RE: Microsoft and Nokia finalize their Windows Phone collaboration agreement

      @guihombre...I see how you are interpreting this, and was my understanding as well when the deal was first announced. However, I personally feel as though Nokia's navigation and Mapping should be exclusive to the Nokia WP devices - this is what will differentiate their device (aside from the quality builds that they are known for) from Samsung, HTC, and the others. I don't think that the other OEM's should get to benefit from Nokia's technology; however, if they do, the users of the other OEM devices should have to pay to use it (i.e. apps) whereas on the Nokia devices the services would be free.
      1019902735