Nokia and Microsoft seal Windows Phone alliance

The companies have formalised their deal to put Windows Phone on Nokia handsets and given more details on how it will affect developers and others in the Windows Phone ecosystem

Nokia and Microsoft have signed a definitive agreement that will govern how they produce smartphones together, just over two months after the partnership was announced.

Stephen Elop and Steve Ballmer

Nokia's Stephen Elop (left) and Microsoft's Steve Ballmer, pictured together in February, have signed a definitive agreement on how their two companies will work together. Photo credit: David Meyer

In February, the companies said they had struck a deal for Nokia to produce Windows Phones with a higher degree of customisation than is available to other manufacturers using Microsoft's mobile operating system. The Finnish firm will also phase out its Symbian OS and scale back its ambitions for MeeGo, the Linux-based OS it has developed alongside Intel.

On Thursday, Nokia and Microsoft said they had managed to finalise and sign their pact ahead of schedule, after 10 weeks of negotiation and discussions. They also provided more details about the partnership, saying Nokia will build a Nokia-branded app store using the Windows Marketplace infrastructure.

"At the highest level, we have entered into a win-win partnership," Nokia chief Stephen Elop said in a joint statement from the partners. Microsoft chief Steve Ballmer said the partnership will mean "Nokia and Microsoft will innovate with greater speed".

At the highest level, we have entered into a win-win partnership.

– Stephen Elop, Nokia

The companies said they have made "significant progress" on the first Nokia Windows Phones, and that Nokia has begun porting "key applications and services" to the Windows Phone platform.

In a blog post, Microsoft and Nokia executives said that the companies have aligned their staff and resources to work on Nokia devices built on Windows Phone.

"Hundreds of our team members are already working together toward a multi-year product roadmap and are on schedule to deliver volume shipments in 2012, although the pressure is on for first delivery in 2011," Nokia's chief development officer Kai Oistamo and Microsoft's mobile communications business president Andy Lees wrote in the blog post.

Oistamo and Lees added that the partners want to market the collaboratively developed phones in "new geographies, at new price points".

According to the companies, Windows Phone developer registration will be free for all Nokia developers, and those involved in the Windows Phone ecosystem will be able to take advantage of Nokia's extensive billing agreements with operators around the world.

Financial agreement

They also reiterated details of the financial agreement, such as the fact that Microsoft will pay Nokia billions of dollars as part of the deal, and Nokia will pay Microsoft a "running royalty" for the use of the Windows Phone platform — but only once the resulting handsets ship.

The deal recognises the value of intellectual property and puts in place mechanisms for exchanging rights to intellectual property, Nokia and Microsoft noted.

"You can expect an increased focus on mobile business and productivity scenarios that build on Microsoft's cloud services, new features for Symbian, and new capabilities for Windows Phone devices," Oistamo and Lees said.

Nokia first-quarter results

Also on Thursday, Nokia released its results for its first quarter. They showed a rise in sales in the same period in 2010, but a significant drop since the last quarter of that year — a standard occurrence in an industry that sells heavily in the lead-up to the holiday season.

However, it was not just device sales that fell — Nokia Siemens Networks, the company's telecoms infrastructure arm, also saw a 20-percent drop in sales since the fourth quarter of 2010.

Profits were down both year-on-year and quarter-on-quarter, except for the Navteq division, where there was a 32-percent profit increase compared with the first quarter of 2010.

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