Nokia – Microsoft Sign Partnership Agreement Ahead of Schedule

In addition to agreeing to the terms of their partnership, including joint contributions to the development of the new ecosystem, Nokia and Microsoft also announced significant progress on the development of the first Nokia products incorporating Windows Phone. 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. 

“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.”

The relationship is structured around four broad areas:

1. A combination of complementary assets, which make the partnership truly unique, including:

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 both companies’ mutual commitment is significant and is in keeping with the intention to build a new ecosystem based on this long-term, strategic partnership.