Microsoft and Nokia finalize their Windows Phone collaboration agreement

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.