Microsoft pays Nokia US$1bn in ‘hello money’ for alliance

8 Mar 2011

Microsoft is understood to be paying Nokia more than US$1bn to promote and develop Windows Phone 7-based handsets as part of their strategic alliance. In turn, Nokia will pay Microsoft a fee for each copy of Windows deployed on its smartphones.

According to a report on Bloomberg, the price Nokia will pay per licence will be offset by a reduction in R&D resources at the Finnish mobile giant.

The US$1bn in hello money to Nokia is understood to have played a role in keeping Nokia from choosing Google’s Android operating system.

Last month, Nokia outlined its new strategic direction, including taking on Windows Phone as its primary OS, a major organisational restructure and a focus on getting developing growth markets connected to the internet. Nokia and Microsoft will also combine services. Nokia Maps will be “at the heart” of Microsoft products, such as Bing and AdCenter.

Symbian will be sidelined as “a franchise platform,” though Nokia expects to sell 150m Symbian devices in the coming years. MeeGo will become an open-source mobile OS project, though Nokia will still ship a MeeGo product later this year.

Microsoft is under pressure to boost sales of its mobile software in a marketplace clearly dominated by Google’s Android operating system and Apple’s iOS-powered devices, like the iPhone and iPad.

Microsoft has 8pc of US smartphone market

According to the latest comScore research into smartphone usage in the US, Google Android took the lead among smartphone platforms, with 31.2pc market share.

The study surveyed more than 30,000 US mobile subscribers and found Samsung to be the top handset manufacturer overall, with 24.9pc market share. LG ranked second with 20.8pc share, followed by Motorola (16.5pc), RIM (8.6pc) and Apple (7.0pc).

Some 65.8m people in the US owned smartphones during the three months ending in January 2011, up 8pc from the preceding three-month period. Google Android captured the No 1 ranking among smartphone platforms for the first time in January, with 31.2pc market share. RIM ranked second, with 30.4pc market share, followed by Apple, with 24.7pc. Microsoft (8.0pc) and Palm (3.2pc) rounded out the top 5.

Subscribers who used downloaded applications comprised 35.3pc of the mobile audience, representing an increase of 1.6 percentage points. Accessing of social networking sites or blogs increased 1.1 percentage points, representing 25.3pc of mobile subscribers. Playing games represented 23.7pc of the mobile audience, while listening to music represented 16.5pc (up 1.1 percentage points).

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years