How much is Nokia’s support for Windows Phone 7 worth to Microsoft? Try more than $1 billion, two sources familiar with a deal between the companies tell Bloomberg.
The deal will run for more than five years, the sources say, which tells us that Nokia will serve as Microsoft’s flagship Windows Phone manufacturer well into the next generation of smartphones. To put it in perspective, in five years Apple would be on its tenth iPhone iteration.
Nokia will also pay Microsoft a fee for every copy of Windows on its phones (so basically, every phone). But Nokia will also be saving quite a bit of money that it otherwise would have been spending on software research and development.
Nokia’s licensing payments will ultimately allow Microsoft to make a profit off of the billion dollar deal, one of the sources said. Microsoft will pay the Finnish phone company a portion of what it’s owed even before it delivers new phones, which are expected to debut at the end of the year. That’s not surprising, since Nokia likely needs the extra cash to make its sexy Windows Phone design concepts a reality.
Like this story? Want to learn more? On April 14-15, our fourth annual VentureBeat Mobile Summit will tackle the eight biggest growth opportunities in mobile today. The invitation-only Summit will gather the top 180 executives at the scenic Cavallo Point Resort in Sausalito, Calif., to discuss issues like this. Request an invitation.