Nokia and Microsoft announced on Thursday the signing of the definitive agreement that defines their strategic partnership.
The partnership, will see Nokia manufacturing smartphones based on Microsoft’s Windows Phone OS.
”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,” said Microsoft’s Mobile Communications Business president Andy Lees.
“At the highest level, we have entered into a win-win partnership,” said Stephen Elop, President and CEO of Nokia Corporation. “It is the complementary nature of our assets, and the overall competitiveness of that combined offering, that is the foundation of our relationship.”
“Our agreement is good for the industry,” said Steve Ballmer, CEO of Microsoft. “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.”
Microsoft’s agreement covers four key areas:
1. A combination of complementary assets, which make the partnership truly unique, including:
- Nokia to deliver mapping, navigation, and certain location-based services to the Windows Phone ecosystem.
- Nokia will build innovation on top of the Windows Phone platform in areas such as imaging, while contributing expertise on hardware design and language support, and helping to drive the development of the Windows Phone platform.
- Microsoft will provide Bing search services across the Nokia device portfolio as well as contributing strength in productivity, advertising, gaming, social media and a variety of other services. The combination of navigation with advertising and search will enable better monetization of Nokia’s navigation assets and completely new forms of advertising revenue.
- Joint developer outreach and application sourcing, to support the creation of new local and global applications, including making Windows Phone developer registration free for all Nokia developers.
- Opening a new Nokia-branded global application store that leverages the Windows Marketplace infrastructure. Developers will be able to publish and distribute applications through a single developer portal to hundreds of millions of consumers that use Windows Phone, Symbian and Series 40 devices.
- Contribution of Nokia’s expertise in operator billing to ensure participants in the Windows Phone ecosystem can take advantage of Nokia’s billing agreements with 112 operators in 36 markets.
2. 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.
3. In recognition of the unique nature of Nokia’s agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars.
4. An agreement that recognizes the value of intellectual property and puts in place mechanisms for exchanging rights to intellectual property. Nokia will receive substantial payments under the agreement.
Now my take on the deal..
I’m not sure that I see the value in the union. I understand from a strategy perspective why Microsoft had to do something but I’m not sure why Nokia would be the company that was chosen.
In the united States, Nokia is hardly the sexiest brand of smartphone even though they have tremendous smartphone coverage in Europe and Asia.
I’m just not certain that long term, this can be a successful union between these two companies. There is a lot to be worked out beyond signing the papers.
How do updates get rolled out? Who has the final say with deisgn decision? How are aesthetic conflicts resolved?
I’m just not sure how their final hybrid product will take on Apple and Google’s Android phones.
The Finnish company’s slow response to the smartphone threat from Apple’s iPhone and the Blackberry handsets has been one of investors’ key concerns.
On Wednesday Apple unveiled a 95% rise in first-quarter profits, and said it had sold a record 18.65 million iPhones during the quarter.
Consultants Strategy Analytics said that Apple had now overtaken Nokia as the world’s largest handset seller in revenue terms.
Despite shifting more than 108.5 million handsets in the last quarter – almost six times that sold by Apple – Strategy says that the US’s firms revenues from its more expensive phones far outstripped its Finnish rival’s.
It’s always challenging when a pure software company gets involved with a hybrid software/mobile hardware player.
Time will tell…