Published on April 22nd, 2011 | by Absar Taqvi4
Nokia-Microsoft Ink Definitive Agreement
Nokia have had too much going on for the past few months. It saw its VPs resign in a matter of hours; it saw the first non-Finnish CEO be welcomed at the helm. It all happened for a few obvious reasons: Nokia, the biggest handset maker in the world, which ruled the mobile arena for decades, was then on a steep decline of losing all that it had earned to makers like Apple, Google and RIM.
Nokia’s incompetency to sustain against the torrent of Apple’s iPhone made the Finnish handset maker to revisit all its strategies, and to somehow gain the share it always had in mature markets. This was from Scandinavia. Out there in the Silicon Valley, Microsoft had also shuffled its ace cards and had released its Windows Phone to survive the cut throat competition presented by Apple and Google.
In a conference earlier this year Google’s CEO Eric Schmidt expressed in clear words that Google would like Nokia to adopt Google’s Adnroid OS for its smartphones. Nokia didn’t only avoided adopting Android, but sat down with Microsoft to give Windows Phone a new life, and its own smartphones a refresher.
“At the highest level, we have entered into a win-win partnership,” said Stephen Elop, President and CEO of Nokia Corporation. “It is the complementary nature of our assets, and the overall competitiveness of that combined offering, that is the foundation of our relationship.”
“Our agreement is good for the industry,” said Steve Ballmer, CEO of Microsoft. “Together, Nokia and Microsoft will innovate with greater speed, and provide enhanced opportunities for consumers and our partners to share in the success of our ecosystem.”
According to the press release issued, main clauses of the agreement are as under:
1. A combination of complementary assets, which make the partnership truly unique, including:
– Nokia to deliver mapping, navigation, and certain location-based services to the Windows Phone ecosystem. Nokia will build innovation on top of the Windows Phone platform in areas such as imaging, while contributing expertise on hardware design and language support, and helping to drive the development of the Windows Phone platform. Microsoft will provide Bing search services across the Nokia device portfolio as well as contributing strength in productivity, advertising, gaming, social media and a variety of other services. The combination of navigation with advertising and search will enable better monetization of Nokia’s navigation assets and completely new forms of advertising revenue.
– Joint developer outreach and application sourcing, to support the creation of new local and global applications, including making Windows Phone developer registration free for all Nokia developers.
– Opening a new Nokia-branded global application store that leverages the Windows Marketplace infrastructure. Developers will be able to publish and distribute applications through a single developer portal to hundreds of millions of consumers that use Windows Phone, Symbian and Series 40 devices.
– Contribution of Nokia’s expertise in operator billing to ensure participants in the Windows Phone ecosystem can take advantage of Nokia’s billing agreements with 112 operators in 36 markets.
2. Microsoft will receive a running royalty from Nokia for the Windows Phone platform, starting when the first Nokia products incorporating Windows Phone ship. The royalty payments are competitive and reflect the large volumes that Nokia expects to ship, as well as a variety of other considerations related to engineering work to which both companies are committed. Microsoft delivering the Windows Phone platform to Nokia will enable Nokia to significantly reduce operating expenses.
3. In recognition of the unique nature of Nokia’s agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars.
4. An agreement that recognizes the value of intellectual property and puts in place mechanisms for exchanging rights to intellectual property. Nokia will receive substantial payments under the agreement.
With the definitive agreement now signed, both companies will begin engaging with operators, developers and other partners to help the industry understand the benefits of joining the new ecosystem. At the same time, work will continue on developing Nokia products on the Windows Phone platform, with the aim of securing volume device shipments in 2012. The scale of the mutual commitment from both companies is significant and is in keeping with the intention to build a new ecosystem based on a long-term, strategic partnership.
This deal is expected to reignite competition in the mobile market as well as in the app development arena. For the past few months Nokia Pakistan has become excessively rigorous in throwing training programs for developers. Many local developers seem to welcome this move and claim that this deal would not really affect Nokia’s or Windows Phone’s developers in a substantial way. It will only create stirs in the upper level hierarchy of giants like Google and Apple.
Nokia’s and Microsoft’s bosses expect this move to pave way for a new mobile eco system. Perhaps they intend to establish an eco-system which would be at logger heads to the steadfast and much mature environment set up by Android and iOS.