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Microsoft and Nokia sign partnership agreement

Microsoft and Nokia look to be well ahead of schedule in their strategic Windows Phone partnership. Today, they announced the signing of the final agreement between the two companies.

Microsoft and Nokia also announced that development of Windows Phone based Nokia devices has made significant progress and Nokia has already started porting applications and services to the platform. The goal is to start volume shipments of the new products in 2012.

Stephen Elop, President and CEO of Nokia Corporation, commented on the mutually beneficial nature of the partnership: “At the highest level, we have entered into a win-win partnership. It is the complementary nature of our assets, and the overall competitiveness of that combined offering, that is the foundation of our relationship.” Steve Ballmer discussed the benefits of bringing greater choice and innovation to the industry: “Our 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.”

The relationship between Microsoft and Nokia is structured around 4 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.

The agreement between Microsoft and Nokia should foster increased competition in the smartphone space. With iOS devices being limited to yearly updates by Apple and Google’s Android OS having to deal with continuous device fragmentation, Microsoft and Nokia have an opportunity to deliver Windows Phone across a broad spectrum of products and not succumb to Apple’s and Google’s limitations.

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