Nokia gains $250 million from Microsoft WP7 deal in Q4

Today Nokia released a pretty shocking quarterly report for Q4 2011, which carried the unfortunate news that Nokia made a $1.2 billion operating loss, mostly from their Location & Commerce division but also from poor smartphone sales. However, one bit of particularly interesting news did arrive from their report, and that is that Microsoft paid Nokia $250 million just in the last quarter to adopt Windows Phone.

Nokia calls this money “platform support payment” and says that this is the first of many other payments that will be coming from Microsoft to help push along their development of new Windows Phone devices. It is expected that the total payout from Redmond for Nokia adopting Windows Phone will "measure in the billions of US dollars".

With all this said, $250 million is a lot of money considering that so far Nokia has only released two devices with Windows Phone on it (the Lumia 800 and 710), and there is only one other device that is expected to launch (the Lumia 900) as far as we know. These devices also haven’t sold amazingly well, with Nokia claiming that they have sold “well over 1 million” of them so far; this pales in comparison to the 10 million Samsung Galaxy S II units sold around 5 months after launch.

We do expect though that 2012 will be a better year for Nokia as they likely will release many devices throughout the course of the year, and hopefully more flagship devices like the Lumia 900; perhaps even some with Windows Phone “Apollo” on-board. It will definitely be an interesting time for Nokia going forward with their $250m+ partnership with Microsoft.

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Well Android oems are paying Microsoft 444 million a year on licenses, so you could say that Android is somewhat indirectly paying Nokia to use WP7. Smart.

rom said,
Well Android oems are paying Microsoft 444 million a year on licenses, so you could say that Android is somewhat indirectly paying Nokia to use WP7. Smart.

so microsoft is indirectly paying me too... if you put it in that perspective.

Manufactures at the best of times don't seem interested in WP7 so paying a high price to get market share and app mass is what Microsoft have to do until they get good traction. Samsung mentioning they are looking into a Galaxy class device for Windows Phone says it all really, waiting until the OS and Apps mature and it's almost getting to the tipping point where more consumers see it as a viable purchase. The smartphone landscape will change soon.

MS is paying Nokia to be their hero device maker and also to do their WP7 marketing. And this is a wise choice.. None of the other WP7 brands can do what Nokia is doing as they are either invisable brands with one look devices (HTC) or way to tied up on other battles (Samsung).

Nokia is the perfect frontrunner and MS sees this and so puts money in Nokias pocket to do the marketing for them.. makes perfect sense..

paulheu said,
MS is paying Nokia to be their hero device maker and also to do their WP7 marketing. And this is a wise choice.. None of the other WP7 brands can do what Nokia is doing as they are either invisable brands with one look devices (HTC) or way to tied up on other battles (Samsung).

Nokia is the perfect frontrunner and MS sees this and so puts money in Nokias pocket to do the marketing for them.. makes perfect sense..

For Nokia.......... undoubtedly, for MS.................... maybe....... We will have to wait n see.
Even at these levels $1 Billion is not peanuts.................

In other news, Nokia's Mobile division made €208 million profit (around $274 million). That's not quite terrible, even if you take away the Microsoft payments (assuming that even went to the mobile division), they're still managing to stay in the green with the mobile division.

~Johnny said,
In other news, Nokia's Mobile division made €208 million profit (around $274 million). That's not quite terrible, even if you take away the Microsoft payments (assuming that even went to the mobile division), they're still managing to stay in the green with the mobile division.

True but most of it came from sales of "Feature phones" not "Smartphones".
Here it is the detailed statement:
http://www.results.nokia.com/r...ts/Nokia_results2011Q4e.pdf

I Love the UI and MS part of the OS but there are a couple of things that are missing.

-Background image, the black/white UI gets boring
-Tile have only one color, gets boring2, add value for each Tile to get own personal color/ own transparent icon/information tile.
-faster app's start-up
-multitasking must work on the live tiles 2
-folders like ios style
-1080p video recording on all future phones, looks amazing on galaxy2 and 4S
-option to get 32GB
-KILLER FEATURES*SECRET WEAPON*
-more Apps Apps Apps x1000 the new apps that everyone talks about, not a year later.
-international support BING?? please??
-more killer games PS Vita like, kills iphone on hardcore gaming instant.
-better screens, iphone4/4s like or 720p+pixeldensity
-no noice with headphones!!!, all WP7 have noise except the Samsungs. very irritating. No problem on iPhone's.
-Updates on the phone
-cloud backup over wifi/pluged in, easy switch no complicated icloud stuff or useless skydrive.
-better hardware, Nokia is the right direction but 1080p video lacks and dual-core speed (doesn't need WP7 i Know but maybe it will play even better Xbox games PS vita like)

I had a LG Optimus 7, loved it for a while but the sound, camera =( and screen were under preforming.

That's why I go with the iPhone 4S now and I love it and everything about it, no caveats just perfect.

Please MS make WP8 Killer with all these improvements and I will jump on the MS/Nokia bandwagon again, WP need more maturing.. I want it to be successful!!!!!! But I only buy the best Hardware/Software combination.

WP must succeed MS.

Edited by Hyperik, Jan 26 2012, 1:49pm :

they're just paying to get there foot in the door and get people using there OS. Microsoft are also running FREE developer courses for windows phone 7 apps, another way of getting people into developing apps.

mbowman said,
they're just paying to get there foot in the door and get people using there OS. Microsoft are also running FREE developer courses for windows phone 7 apps, another way of getting people into developing apps.

Really? Do you have a link for that?

mbowman said,
they're just paying to get there foot in the door and get people using there OS. Microsoft are also running FREE developer courses for windows phone 7 apps, another way of getting people into developing apps.

Microsoft runs free development courses all the time on a wide range of topics. This is not new or specific to Windows Phone.

Well, considering they're still working to release their first phones around the world, I think 1 Million units is pretty good.

M_Lyons10 said,
Well, considering they're still working to release their first phones around the world, I think 1 Million units is pretty good.

I agree with you having sold over a million phones in over a month, would give them 5 million phones over the course of 5 moths like the Galaxy, And, they are only selling it in 5 markets, whilst the Galaxy is being sold in many more geographies. The sales of Galaxy should only be compared in the same markets.

sviola said,

I agree with you having sold over a million phones in over a month, would give them 5 million phones over the course of 5 moths like the Galaxy, And, they are only selling it in 5 markets, whilst the Galaxy is being sold in many more geographies. The sales of Galaxy should only be compared in the same markets.


Its not 1 million in 1 month. its 1 million in 2 and half months..

still1 said,

Its not 1 million in 1 month. its 1 million in 2 and half months..

Which still is not bad when it was not globally available in those 2 and a half months (Nor is it now even), compared to the Galaxy S which WAS and is highly regarded for it's amazingly good sales. These figures are pretty decent.

M_Lyons10 said,

Which still is not bad when it was not globally available in those 2 and a half months (Nor is it now even), compared to the Galaxy S which WAS and is highly regarded for it's amazingly good sales. These figures are pretty decent.


ok!!! I know that!!! I am pointing out the mistake in the comment..
it still didnt beak the predictions by the analyst who said 1.3 million in 1.5 months..

still1 said,

Its not 1 million in 1 month. its 1 million in 2 and half months..

Not it's "well over 1million" in 6 countries (only).

Microsoft had to pay Nokia for Nokia to use Windows Phone 7?

Isn't the whole point of Microsofts Windows Phone 7 to sell an operating system? This is like America giving Isreal $3 Billion dollars to buy US weapons. Seems silly to me, if anything Nokia should be the one paying Microsoft.

This to me doesn't look good for Windows Phone when you have to pay 250 Million just to get a handset maker to use it over Android. Also Nokia seems convinced that Microsoft is going to eventually have paid them $1 Billion dollars just for adopting Windows Phone 7? - And Nokia says this is for 'platform support' in the adoption of Windows Phone, does this lead us to believe that Windows Phone is detrimental to handset makers? That the difficulty of rolling it out is so high they need financial aid just to do it? Seems like BS to me.

windows phone is trailing in 3rd or 4th place after android and ios, maybe blackberry too.
Doing this increases their market share (nokia also does advertising, they spent $100m on advertising the first lumia alone) and there might have been stock traded too, overall it work's to MS's favour.

n_K said,
windows phone is trailing in 3rd or 4th place after android and ios, maybe blackberry too.
Doing this increases their market share (nokia also does advertising, they spent $100m on advertising the first lumia alone) and there might have been stock traded too, overall it work's to MS's favour.

I understand that completely but it's still ridiculous to pay out $250 Million dollars with eventually it arriving at over 1 Billion dollars just to get a handset maker to choose your operating system. I do wonder what (if any) money HTC received for adopting Windows Phone 7? I'm betting a lot less than 250 Million, if anything.

Microsoft might as-well just buy Nokia instead of renting them.

Vice said,

I understand that completely but it's still ridiculous to pay out $250 Million dollars with eventually it arriving at over 1 Billion dollars just to get a handset maker to choose your operating system. I do wonder what (if any) money HTC received for adopting Windows Phone 7? I'm betting a lot less than 250 Million, if anything.

Microsoft might as-well just buy Nokia instead of renting them.

I think HTC received nothing for selling Windows Phone, as they are not exclusive. This is the difference in Nokia's deal with Microsoft. They will be exclusive with WP.

n_K said,
windows phone is trailing in 3rd or 4th place after android and ios, maybe blackberry too.
Doing this increases their market share (nokia also does advertising, they spent $100m on advertising the first lumia alone) and there might have been stock traded too, overall it work's to MS's favour.

Windows phone is trailing after all smartphones including RIM and Samsung Bada with only 1.2% market share.

Vice said,

I understand that completely but it's still ridiculous to pay out $250 Million dollars with eventually it arriving at over 1 Billion dollars just to get a handset maker to choose your operating system. I do wonder what (if any) money HTC received for adopting Windows Phone 7? I'm betting a lot less than 250 Million, if anything.

Microsoft might as-well just buy Nokia instead of renting them.

I believe this money was an advertising subsidy more than anything. I think people are making more out of it than it is.

Vice said,

I understand that completely but it's still ridiculous to pay out $250 Million dollars with eventually it arriving at over 1 Billion dollars just to get a handset maker to choose your operating system. I do wonder what (if any) money HTC received for adopting Windows Phone 7? I'm betting a lot less than 250 Million, if anything.

Microsoft might as-well just buy Nokia instead of renting them.

Well what would you do if you wanted to try and gain more marketshare for a new platform just developed trying to compete with already accomplished OS's such as Android or iOS? If you had the money, I'm sure you'd try and do whatever it took to get your platform to take off, and I guess 250m is nothing to Microsoft.

xXgreatestever said,

Well what would you do if you wanted to try and gain more marketshare for a new platform just developed trying to compete with already accomplished OS's such as Android or iOS? If you had the money, I'm sure you'd try and do whatever it took to get your platform to take off, and I guess 250m is nothing to Microsoft.

Make a better product? -- Before Android came alone OEM's were using Symbian pretty heavily. Especially Nokia. To pay companies to use your product instead of making something better (Which is what Android did to kill Symbian) is in my opinion.. pathetic. And it's not just 250 Million. Nokia is expecting Microsoft to have paid them over $1 Billion dollars by the end of this.

This actually may be an Anti-Trust issue where Microsoft is using their Monopoly in other buisnesses to funnel money in to making companies choose their product, not on the merits but on the size of their pocket books. This is the same thing Intel was sued for, remember when Intel paid Dell to buy Intel processors exclusively? AMD sued. Intel settled with AMD because it looked like they were going to be fined 9 Billion dollars and that was too risky to chance.

How is that situation any different to this one? Because its an OS instead of a CPU?

Vice said,
Microsoft had to pay Nokia for Nokia to use Windows Phone 7?

Isn't the whole point of Microsofts Windows Phone 7 to sell an operating system? This is like America giving Isreal $3 Billion dollars to buy US weapons. Seems silly to me, if anything Nokia should be the one paying Microsoft.

This to me doesn't look good for Windows Phone when you have to pay 250 Million just to get a handset maker to use it over Android. Also Nokia seems convinced that Microsoft is going to eventually have paid them $1 Billion dollars just for adopting Windows Phone 7? - And Nokia says this is for 'platform support' in the adoption of Windows Phone, does this lead us to believe that Windows Phone is detrimental to handset makers? That the difficulty of rolling it out is so high they need financial aid just to do it? Seems like BS to me.

Google has stated that they were interested in Nokia adopting Android but Microsoft paid more.

alexalex said,

Google has stated that they were interested in Nokia adopting Android but Microsoft paid more.

Now that Google has purchased Motorola's phone business I'd like Microsoft to buy Nokia. That would be interesting.