Nokia, Microsoft close mobile deal worth billions

Microsoft and Nokia signed a deal today worth billions of dollars, The Seattle Times reported today. The agreement will make Windows Phone 7 the primary operating system for Nokia’s smartphones, helping Microsoft to better compete with Apple’s iPhone and Google’s Android operating system.

Meanwhile, Nokia will take over mapping and navigation services for the Windows Phone “ecosystem” with its Navteq, which could extend to non-Nokia devices, paidContent explained. Search, of course, will be given to Microsoft’s Bing, which will be the default search service on all Nokia devices. The two will also launch a Nokia-branded app store.

The deal between the world’s largest software maker and the world’s largest handset maker comes as Nokia reported an 18 percent slump in quarterly earnings, with sales at €10.4 billion for the first quarter this year.

Although Microsoft is paying billions for the deal, it hopes to earn that money back, with royalties on each handset sold, the San Francisco Chronicle pointed out.

“Microsoft will receive a running royalty from Nokia for the Windows Phone platform, starting when the first Nokia products incorporating Windows Phone ship. The royalty payments are competitive and reflect the large volumes that Nokia expects to ship, as well as a variety of other considerations related to engineering work to which both companies are committed. Microsoft delivering the Windows Phone platform to Nokia will enable Nokia to significantly reduce operating expenses,” Nokia stated in a press release.

Image: MobileTechWorld.com

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