Microsoft Paying Over a Billion Dollars for Nokia Phones

Wow that’s a whole lotta cash!!! We knew that alot of money was involved in the Microsoft/ Nokia deal but Bloomberg reports that Microsoft paid over 1 Billion dollars for Nokia to adapt Windows Phone 7 as their primary OS.

Nokia will pay Microsoft a fee for each copy of Windows used in its phones, costs that will be offset as Nokia curtails its own budget for software research and development, said one of the people, who declined to be identified because the final contract hasn’t yet been signed. The agreement runs for more than five years, the people said.

Nokia’s royalty payments will help Redmond, Washington- based Microsoft make a profit on the accord even after the payments to Nokia, one person said. Some of the payment to Nokia would be made before the company starts selling the phones, meaning Microsoft bears some upfront cost in the partnership.

Days after the agreement was announced, Nokia CEO Stephen Elop said the agreement will add billions of dollars in value to Nokia, without specifying how much. Microsoft’s Lees said the agreement involves funds changing hands for royalties, marketing and ad-revenue sharing. Both companies have declined to provide specific amounts.

Is the deal worth 1 billion? I think so… Microsoft needs a boost in handsets available and those Nokia phones can’t come fast enough.

Source: Bloomberg Business Week Via Engadget