Monday, February 14, 2011, 06:05 am PT (09:05 am ET)
Microsoft paying Nokia billions to adopt Windows Phone platformNokia will receive billions of dollars from Microsoft for adopting the Windows Phone platform on future smartphones, as the two companies struggle to compete with Apple and Google in the mobile space.
According to The Associated Press, Nokia Chief Executive Stephen Elop revealed at this week's Mobile World Congress that Microsoft is paying the Finnish handset maker billions of dollars to switch to Windows Phone. Elop revealed the agreement in an effort to appease investors, after his company's stock tumbled 14 percent following the announced partnership with Microsoft.
The CEO said Microsoft's payments acknowledge the "substantial value to contribute" that Nokia offers the Redmond, Wash., software giant. He also said that his company will pay Microsoft royalties for the use of its software, as is standard practice.
Elop was also asked if he's a "Trojan horse" for Microsoft, his former employer, to which he replied "No." He said the decision to adopt the Windows Phone platform was unanimous among Nokia's senior management.
Nokia announced last week that it plans to ditch its Symbian operating system for future smartphones and will instead focus on creating new handsets running Microsoft's Windows Phone platform. Through the partnership, in which the two will "integrate key assets," the companies said they plan to introduce a "new global mobile ecosystem" by jointly creating new mobile products and services.
Nokia went on to reveal on Monday it plans to release its first handsets running the Windows Phone platform this year. Elop said that his company is "feeling the heat" to meet a 2011 deadline.
Elop, previously the head of Microsoft's Business Division, took over as CEO of Nokia in September of 2010. Nokia has struggled to maintain its dominance in the smartphone market as competitors Apple and Google have found great success.
Elop candidly acknowledged those struggles in a 1,300-word letter to employees issued this month. In it, he compared the company's Symbian mobile operating system to a "burning platform" that the company was forced to jump off of in order to survive.
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