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Microsoft to pay Nokia more than $1 billion for using Windows Phone OS, report says

March 8, 2011 |  8:27 am

Steve Ballmer, Microsoft CEO

Microsoft has agreed to pay Nokia more than $1 billion to release smart phones running the Windows Phone operating system in a still-unsigned deal between the two companies, according to a report.

That money will be paid out over a five-year span, with some of it coming up front to help fund Nokia's development and marketing of the new line of phones, which have yet to be given a release date, according to a report from Bloomberg.

Microsoft, which launched Windows Phone 7, the latest version of its smart-phone OS, last fall, will be paid back royalties for each handset Nokia sells when the phones hit the market, Bloomberg said, citing two unnamed sources on the details of the agreement.

One of the Bloomberg sources said the contract hasn't been finalized or signed and that no timetable for when that might happen was offered. 

Stephen Elop, Nokia CEO In a joint news conference with Microsoft Chief Executive Steve Ballmer, Nokia CEO Stephen Elop announced last month in London that the cellphone maker was choosing Windows Phone over Google's Android or even its internally developed Symbian as its main operating system for smart phones.

Elop, who was a Microsoft executive before heading over to run Nokia last September, made the announcement days after he reportedly sent a company memo in which he said Nokia was "standing on a burning platform" with "more than one explosion -- we have multiple points of scorching heat that are fueling a blazing fire around us."

In February, at the London announcement, Elop and Ballmer said Nokia and Microsoft were already working together on developing a line of phones running Windows Phone software, despite not having a contract signed back then.

Microsoft said then that it would gain access to Nokia's worldwide mapping and navigation services, as well as to large cellphone carriers in international markets that it hasn't had before.

Nokia accounted for about 41% of the global mobile phone market in 2008, but that number fell to about 31% in 2010, according to the Associated Press.

Despite the falling numbers, Nokia remains the world's top seller of mobile phones, but in January, Android dethroned Nokia's Symbian smart-phone operating system as the world's most used mobile OS.

RELATED:

Nokia to use Microsoft's Windows Phone in taking on Android, iPhone

Nokia CEO Stephen Elop reportedly says company is "standing on a burning platform"

-- Nathan Olivarez-Giles

twitter.com/nateog

Top photo: Microsoft CEO Steve Ballmer delivers a speech about the alliance between Microsoft and Nokia during the 2011 Mobile World Congress, held in Barcelona, Spain, on Feb. 14, 2011. Credit: Toni Albir/EPA

Bottom photo: Stephen Elop, CEO of Nokia, speaks during an interview with the Associated Press at the Mobile World Congress in Barcelona, Spain, Monday, Feb. 14, 2011. Credit: Manu Fernandez/AP Photo

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