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Nokia CEO Stephen Elop
"I'm gonna make him an offer he can't refuse."

Nokia ruffled more than a few feathers when it announced that it would be shacking up with Microsoft when it comes to smartphone operating systems. Feeling the heat from smartphone operating systems like Apple's iOS and Google's Android, Nokia is winding down its efforts with MeeGo and Symbian in order to embrace the nascent Windows Phone 7 (WP7) operating system.

Now, a new report from BusinessWeek suggests that Nokia was offered a sweet deal to go with Microsoft’s WP7 operating system over the rival Android OS. BusinessWeek says that Nokia will receive roughly $1B as a part of a 5-year deal with Microsoft.

Microsoft, of course, will also profit handsomely from its $1B investment if Nokia's WP7 offerings take off in the marketplace. Unlike with Google's freely available Android OS, Nokia will pay Microsoft a royalty fee for each WP7 handset that it sells.

“This gives Microsoft scale and allows Nokia to rip out costs,” said Colin Gillis, an analyst at BGC Partners in New York, who recommends buying Microsoft shares. “Microsoft is getting the platform boost.” 

Although $1B USD is a nice motivator to adopt WP7, Nokia's Stephen Elop claims that Nokia would have gotten lost in vast sea of me-too Android devices, and that the Microsoft partnership gives it a chance to shine. “A decision to go with Windows Phone creates a very different dynamic. Windows Phone is a challenger. It becomes a three-horse race,” said Elop according to Mobile Beat.

Nokia’s Symbian operating system has been under a constant assault from Android. Android overtook Symbian as the world’s best-selling smartphone operating system in Q4 2010 (33.3 million units versus 31 million units).

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RE: Anti-Trust?
By FITCamaro on 3/7/2011 7:53:32 PM , Rating: 2
How is this any more anti-competitive than Apple not allowing others to make handsets with iOS on it?

Gotta love it when everyone screams foul play when Microsoft does something to potentially increase its business.

RE: Anti-Trust?
By Argon18 on 3/7/11, Rating: 0
RE: Anti-Trust?
By StraightCashHomey on 3/7/2011 9:23:20 PM , Rating: 1
Or why don't you look at it this way:

Hmm.. should I choose Microsoft, who I have to pay royalties to for every device I sell, or should I choose Google, who will let us use their OS for free?

"Yeah, that isn't anti-competitive at all. :rolleyes:"

Microsoft is leveling the playing field as far as I'm concerned. I also think Nokia made a great decision because Windows Phone 7 is a sleeping giant. As soon as it gets more exposure, it's going to really take off, and Nokia is going to say "I told you so".

RE: Anti-Trust?
By Argon18 on 3/8/11, Rating: -1
RE: Anti-Trust?
By FITCamaro on 3/8/2011 10:38:50 AM , Rating: 1
So should Apple be sued for being an effective monopoly in the MP3 player market? My guts tell me you'll say no.

RE: Anti-Trust?
By nikon133 on 3/8/2011 2:49:49 PM , Rating: 2
Well, no one stopped Google to make better offer to Nokia. And no one forced Nokia to accept offer.

MS was willing to invest money into Nokia as their major handset partner in the future; nothing wrong with that. MS could just as well give them OS for free for a limited time/number of sold handsets, but I'm guessing Nokia needed some hard cash to sort some problems of their own.

RE: Anti-Trust?
By drlumen on 3/8/2011 8:39:08 PM , Rating: 2
Exactly. I keep wondering how this is any different than Intel being tagged as being anti-competitive for providing incentives for using intel chips more exclusively? Intel was allowing the incentive for any computer OEM using their chips. But, for some reason, it is perfectly OK for Microsoft to PAY one company (the market leader of phones) to not use anything but their inferior OS.

Amazing. Perhaps the FTC will step in to investigate this strangeness. Especially when the new Nokia CEO is an ex-M$ employee. This all smells really fishy to me.

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