Microsoft and Nokia Working on a 5-Year, $1 Billion Contract

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Nokia announced recently that it is going to use Microsoft’s Windows Phone operating system on all its future smartphones. Apparently, Microsoft used its checkbook to convince Nokia to make this decision.

Concept Nokia Smartphones Running Microsoft Windows Phone 7The details of the 5-year agreement between these two companies have not been officially announced, but Bloomberg is reporting one of the more significant details: payments by Microsoft totaling $1 billion.

As Nokia is going to license Windows Phone, it will be paying Microsoft for each copy of this operating system it uses. However, Microsoft is going to give Nokia considerably more — money that will help the Finnish phone company create and advertise new smartphones running Windows Phone 7.

Although it was announced last month, many of the details of the Microsoft/Nokia agreement are still being worked out.

Microsoft vs. Google
When Nokia decided to give up creating its own operating system for high-end smartphones, it had two choices to switch to: Google’s Android OS and Microsoft’s Windows Mobile.

Google doesn’t charge a licensing fee for its phone software like Microsoft does, but the Redmond-based software giant was apparently willing to throw in quite a bit of cash to sweeten its offering.

Google allows device makers to modify the Android OS in any way they want. Previously, Microsoft had been very restrictive about Windows Phone, but Nokia is being given a free rein to make changes to this operating system.

Nokia is the world’s largest phone maker, even if its smartphone business is struggling, and Microsoft clearly wanted it to be an ally against Google instead of another competitor — and was willing to reach deep into its pockets to make this happen.

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