Microsoft and Nokia ink WP7 strategic pact

"We have entered into a win-win partnership"...

Nokia's Elop and Microsoft's Ballmer announced their pact in February and have now signed the agreementPhoto: David Meyer/ZDNet UK

Microsoft and Nokia have signed their strategic alliance over the Windows Phone 7 (WP7) smartphone operating system.

The pact was announced in February by the pair's CEOs: Microsoft's Steve Ballmer and Nokia new chief and former Microsoft exec Stephen Elop.

Microsoft charges mobile makers a licence fee for use of its smartphone OS - and Nokia is no exception. The pair said Nokia will pay a "running royalty" to use Microsoft's WP7 platform from the date the first Nokia WP7 handsets ship.

However, unlike other WP7 users, Nokia will also receive "payments measured in the billions of dollars" from Microsoft for adopting WP7.

"At the highest level, we have entered into a win-win partnership," said Elop, president and CEO of Nokia, in a statement. "It is the complementary nature of our assets, and the overall competitiveness of that combined offering, that is the foundation of our relationship.

Ballmer said in a statement that their agreement is good for the industry. "Together, Nokia and Microsoft will innovate with greater speed, and provide enhanced opportunities for consumers and our partners to share in the success of our ecosystem," he said.

The two companies said they have come to an agreement on intellectual property rights that puts in place mechanisms for exchanging IP. Nokia will receive substantial payments under the agreement, they added.

Microsoft and Nokia also have a plan for approaching their various "complementary assets". They said Nokia will deliver mapping, navigation and certain location-based services to the WP7 ecosystem, and will be able to innovate on top of the platform in areas such as imaging while contributing expertise on hardware design and language support, adding that Nokia will "help to drive the development of WP7".

The deal will also see Microsoft's Bing search services rolled out across Nokia's device portfolio. Microsoft will also contribute productivity, advertising, gaming, social media and a variety of other services to Nokia devices. The pair believe the combination of navigation with advertising and search will capitalise on Nokia's navigation assets and open up new forms of ad revenue.

The two companies will also collaborate on their approach to developers, establishing joint developer outreach and app sourcing to support the creation of new local and global apps, while WP7 registration will be free for all Nokia developers.

There will also be a new Nokia-branded global app store, based on the Windows Marketplace infrastructure. Developers will be able to publish and distribute apps through a single developer portal to WP7, Symbian and Series 40 mobile device users.

Nokia's operator billing capabilities will also be extended to the WP7 ecosystem so WP7 mobile users and developers can tap into Nokia's billing agreements with 112 operators in 36 countries.