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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: is this any surprise?
By oab on 3/7/2011 11:23:37 PM , Rating: 3
You remember that when Microsoft was giving IE out for free, Netscape was free too right?

The business model of Netscape was this:
Give away browser (Netscape Navigator)
Charge for browser suite (Netscape Communicator, included a mail client & etc. it cost $29.99)
Charge for the Netscape server software

Another reminder: Netscape had lost so much market share, and was in such trouble bringing Netscape 5 to market (as they had an almost unmaintainable code base) that they open-sourced it. The idea was the the open-source community would rally behind it, fix up its problems, and Netscape could leapfrog IE to version 6. Unfortunately, the Mozilla project took too long, Netscape was purchased by AOL, and AOL decided to keep using IE as their default browser (despite just purchasing a browser company).

The Netscape web server was undermined (in part) by Apache and IIS, and the generally failing fortunes of the Netscape company as a whole.

RE: is this any surprise?
By mcnabney on 3/8/2011 9:16:44 AM , Rating: 2
I think the point was the bundling.

IE was already installed, so for 95% of computer users they never thought to install another browser. This allowed MS to leverage the OS monopoly for a browser one too. As computers were replaced over the years, Netscape disappeared. It really is no different than Dumping. If you didn't know, that is when a business sells / gives away a product at a loss in order to put pressure on competitors.

RE: is this any surprise?
By Smilin on 3/8/2011 12:28:05 PM , Rating: 2
Microsoft basically got smacked for being forward looking.

They aregued at the time that the Web Browser is part of the OS and that argument fell on deaf ears.

Today the argument would have held. When you take a computer out of the box it's expected to: Play a CD when you pop it in, and surf the internet. Netscape was basically saying you should have to go actually get something separate to enable such things.

Netscape basically was offering something with little real added value so nobody bothered to switch.

MS sat on their butt with IE for 3 more versions and OTHERS decided to offer products of value like Firefox, Opera, Chrome etc and they are doing awesome in the marketplace. Netscape has nobody to blame but themselves.

RE: is this any surprise?
By mcnabney on 3/8/2011 3:04:18 PM , Rating: 2
Have you forgotten that Netscape 'created' Mozilla which lives on in Firefox.

RE: is this any surprise?
By Smilin on 3/9/2011 4:20:24 PM , Rating: 2

That just further illustrates my point. Firefox is thriving in the same environment that killed netscape. If it was so unfair then how is FF doing it?

Netscape shot themselves in the foot by trying to charge for a free commodity.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer

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