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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: Ouch
By Smilin on 3/9/2011 4:35:03 PM , Rating: 2
Microsoft isn't going to make money on the deal. They are just buying market share.

I don't think you really get any of the big picture. Microsoft is not trying to sell smartphones. Neither is Google. They are selling mindshare and information to obtain an ecosystem. In such an ecosystem is where the real money is made.

WP7 is just there to sell Bing, Ad Revenue, Zune subscriptions, movies, music, TV, profit shares on Netflix,, pandora, Live mesh, office, geo located add placement, apps etc..

A 65billion software company doesn't give two craps about the $25 bucks they make on a phone.

You think others aren't buying marketshare? Go listen to the Beatles and tell me where you end up going.

Mcnabney I'm calling you out: You're an MSFT hater man. A hater...and your arguments suck so bad you make me miss Tony.

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