Nokia and Microsoft sign agreement ahead of schedule

21 Apr 2011

The Microsoft cavalry couldn’t have come to the rescue of the stranded Nokia pioneers sooner. On a day Nokia saw its share of the smartphone market plummet from 41pc to 26pc, the signature on a definitive agreement ahead of schedule must be balm to nerves of concerned Nokia shareholders.

Nokia’s revenues today fell to €10.4bn in the first quarter of 2011, down 18pc from the last quarter.

As the world nibbled on that bit of news, Microsoft and Nokia announced they have signed the definitive agreement ahead of schedule to create a wholly new mobile ecosystem.

The next question of course will be when will we see the first devices? Before Christmas or just in time for next year’s Mobile World Congress?

They say that already hundreds of personnel in both companies are engaged in joint engineering efforts and are collaborating on a portfolio of new Nokia devices.

Nokia has started porting key applications and services to operate on Windows Phone 7 and joint outreach has commenced to third-party app developers, the companies say.

“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.”

How the Microsoft-Nokia relationship will work

The relationship is structured around four key areas:

–         Combination of complimentary assets like mapping, imaging, hardware design and the Bing search ecosystem; developer outreach; Windows Marketplace infrastructure

–         Microsoft will receive a running royalty from Nokia for the Windows Phone platform, starting when the first products ship

–         Nokia will receive payments numbered “in the billions of dollars”

–         Nokia will also receive substantial payments under an intellectual property agreement.

“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.”

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