Nokia paying Microsoft €500m for using Windows Phone
Summary: Nokia's fees to Microsoft for using its mobile OS are expect to outstrip Microsoft's support payments to the handset maker to the tune of several hundred million euros.
Nokia's licence payments to Microsoft for Windows Phone are to cost it €500m more than the support payments it gets from Microsoft for using the OS.
Last quarter Nokia flagged that payments to Microsoft would "exceed" the $1bn a year it gets from Microsoft in the form of "platform support payments", but didn't detail to what extent.
Under the arrangement in place since 2011, when Nokia began using Windows Phone as its primary smartphone platform, Microsoft pays Nokia $250m (€190m) a quarter to support it, while Nokia pays a minimum level of licence fees in return. Up until last quarter, Nokia's incoming support payments had exceeded its outgoing royalties to Microsoft, helping buoy Nokia's dwindling cash levels during its transition to Windows Phone.
In the company's full-year 20F filing with the SEC, published on Thursday, it predicted that for the rest of the duration of its deal with Microsoft, its licence payments to the company will be €500m ($654m) more than it receives in support.
"As of the end of 2012, the amount of platform support payments received by Nokia has exceeded the amount of minimum software royalty commitment payments made to Microsoft, thus the net cash flows have been in our favor. As a result, the remaining minimum software royalty commitment payments are expected to exceed the remaining platform support payments by a total of approximately €0.5bn over the remaining life of the agreement," the filing said.
Still, over the lifetime of the deal as a whole, Microsoft's support payments will be "slightly" larger than Nokia's minimum royalty payments to Microsoft, Nokia said, leaving it with net cash flow in its favour.
Nokia no doubt expects to increase sales of its Lumia devices, which run Windows Phone, well beyond the 4.4 million Windows Phone Lumias it shifted in Q4 2012.
Sales of the handsets are already on an upward trajectory - Nokia sold one million Lumias in 2011 (the devices were released in October of that year), and over 14 million in 2012.
Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.
Talkback
Keep digging that hole Nokia
Dig one hole for yourself... Mr. Lunatic
Yup.
Why do you guys bother replying to him?
Nokia paying Microsoft €500m for using Windows Phone
Should Have Kept Up With MeeGo
And zero in the bank buys you....
Plus it's a percentage fee; they still get the lions share of the money, so whilst their payments increase so does their cash flow, and, so long as five year olds don't run accounts over there their profit.
If Nokia had seen two years ago that meego could have provided the same kind of future they would not have made this deal. Simples.
As for WP8, I like it, it's not for me, but I do like it; the days of seriously crappy WP os's is over.... Well with the exception of no app support it was ending in 7, but We now have a three horse race and over the next few months I expect to see bb make it four.
So does that mean that Nokia is buying more licenses
It looks so
http://wmpoweruser.com/windows-phone-has-a-16-3-market-share-in-poland-one-of-the-highest-in-the-world/
Almost every one who buy Windows Phone chose device from Nokia, and every one waiting impatiently for the new Lumia models.
Don't be stupid...
Sales of licenses to OEMs (in this case Nokia) doesn't equate to end-user sales. And unless you can get an exact number to-the-customer (no extrapolating on shipments - that's funny accounting!) the numbers are meaningless and just marketing spin!
You sound like you are trying to convince yourself.
Almost every number you see has some sort of positive spin on it from the company that releases it and I can't think of anyone that give exact number to customer info that you desire. Especially when there is a huge multination distribution chain.
But M(dollar sign) are EVIL!
After all - the few thousand between 14 million and 14.001 Million is still a few thousand! Lest anyone overestimate their measly market share and think that this thing is trending!
Kudos to Nokia. Kudos to Microsoft
Nokia would have made 500 million more using Android.
Laughable
Second, there is only 1 profitable Android OEM: Samsung. Android as a platform is a money loser for OEMs. Samsung is profitable because Samsung is a great company, not because Android is a profitable platform for OEMs. It would be like suggesting that using Intel chips in your PC guarantees profits because apple is profitable and they use Intel chips.
And don't forget
All in all, licensing Windows Phone is cheaper than licensing Android.
Re: All in all, licensing Windows Phone is cheaper than licensing Android.
Common Linux mantra...
Translation: My time is worthless.
Re: Translation: My time is worthless.
...oh, wait, that's Windows.
You sound like the Linux-fan version of Loverock...
I did actually laugh a bit at your post for another reason - the one computer giving me issues right at this moment is my kids' machine, running Edubuntu, which hasn't been able to keep a steady connection to the internet ever since installing the *only* wireless USB adapter I could find that specifically states that it works for Linux.
And no - there's no "apt-get" available to fix that adapter. Just a good old fashioned shell-script installer, similar to the one I had to run to install VMware.
And no - it's not the adapter, either. My Windows 7 machine works with it just fine. Out of the box.