Stephen Elop, the former Microsoft executive who now heads up Nokia, was accused of being a Microsoft Trojan horse last month when Nokia announced that it would effectively be killing off its self-developed Symbian and MeeGo mobile operating system in favor of Microsoft’s Windows Phone 7. At the time, fans of the spurned Nokia platforms charged that Nokia’s crown jewels were being given away for a song.
On that account, at least, they were wrong, if Bloomberg’s report is to be believed: Per that report, Microsoft is paying Nokia more than $1 billion for Nokia’s role in promoting and developing mobile phones that will carry Windows Phone 7.
If it succeeds, the partnership may benefit both sides financially while helping stave off a smartphone threat from Apple Inc. and Google Inc. Nokia shares have dropped 26 percent since the accord was unveiled Feb. 11, reflecting doubts about the move to adopt Microsoft’s operating system, which is less than six months old and has just a few percentage points of market share.
But here’s the thing: Nokia will still be paying Microsoft a licensing fee for every copy of Windows Phone 7 on one of its phones. Though we don’t know what that fee is, that sounds a little outrageous.
MG Siegler: “It’s so ridiculous that Microsoft is sticking with this licensing system. You can license Android, the market leader now, for free. Microsoft? There’s a fee. For each phone. Who in their right mind would do that? Wait — let me rephrase. Who in their right mind not getting $1 billion in free advertising/development costs and not run by a recently departed Microsoft executive would do that? Unless this Nokia gamble pays off — and in a big way — the answer will be no one.”
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