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, 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).