Nokia partnership costing Microsoft $1bn?

The Gadget Show  Tuesday 08 March 2011

Microsoft has paid heavily to keep Nokia away from Android

When Nokia announced last month that it was hitching its wagon to Microsoft’s mobile post, both parties insisted that no cash had changed hands.

However, with the fine details of the deal still being worked out, Bloomberg is quoting “two people with knowledge of the terms” as saying up to $1bn will be heading out of Microsoft’s coffers, destination Finland.

For its part, the sources say, Nokia will pay Microsoft a licence fee for every copy of the Windows Phone operating system it sticks on its handsets, a cost that will be offset by the drastic reduction in the company’s astronomical R&D budget.

However, it appears Microsoft will pay Nokia a considerable chunk of change up front for access to its formidable patent portfolio – a deal that is expected to run for more than five years. In addition, Microsoft will get access to Nokia’s mapping service.

It’s believed the deal was set up in such a way to lure Nokia away from the potentially more attractive option of teaming up with Android instead.