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.