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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 Landiepete on 3/8/2011 4:18:44 AM , Rating: 2
You're ignoring one of the basic realities.

Research an developement is expensive business. It takes a major investment, not only monetary, but also in time and effort to develope a cute idea into something useable. Morover, the return is unknown, and depends largely on the ability to monetize the outcome.

Google is in a position where it can constantly scan the market for things that look interesting or promising.
If they detect anything that tickles their fancy, the gigantic amount of money and resources they're sitting on allows them to develop an alternative at breakneck speed, and then 'give it away for free' to gain momentum. They do not have to worry about getting (ginger)bread on the table before a product gains the necessary traction to make it a success.
This is different to (e.g.) the strategy Microsoft has employed for many years, simply buying out small ompanies with promising tech.

Google is skewing the 'normal' supply and demand and R&D simply because they have too much money.

RE: is this any surprise?
By fishman on 3/8/2011 9:57:56 AM , Rating: 2
Google is skewing the 'normal' supply and demand and R&D simply because they have too much money.

The same is true for Microsoft. Look at how much money they have dumped on the Xbox before it became profitable. And they are willing to spend many billions on Windows Phone.

RE: is this any surprise?
By someguy123 on 3/8/2011 1:56:54 PM , Rating: 3
Yet people agree with you.

Point out that google is doing the same and people will ignore reality in favor of free software.

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