Nokia, the world's biggest mobile phone maker, and Microsoft today signed a definitive agreement for their 10-week-old strategic union. The partnership will result in a new global mobile ecosystem, utilising the very complementary assets of both companies. "In the first quarter, we shifted from defining our strategy to executing our strategy. On this front, I am pleased to report that we signed our definitive agreement with Microsoft and already our product design and engineering work is well underway," Stephen Elop, president and chief executive officer of Nokia said.
The two companies also announced progress on the development of the first Nokia products incorporating Windows Phone. With hundreds of personnel already engaged on joint engineering efforts, the companies are collaborating on a portfolio of new Nokia devices. Nokia has also started porting key applications and services to operate on Windows Phone and joint outreach has begun to third-party application developers.
"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."
The relationship is structured around four broad areas:
1. A combination of complementary assets, 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 monetisation 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 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 recognises 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, work will continue on developing Nokia products on the Windows Phone platform, with the aim of securing volume device shipments in 2012.