

Microsoft paid Nokia $250m for Windows Phone use - hencq
http://thenextweb.com/microsoft/2012/01/26/microsoft-paid-nokia-250-million-for-its-use-of-windows-phone-platform/

======
brudgers
$250 million for a long term hardware partner is not much compared with the
$12.5 billion Google is spending to acquire Motorola Mobiity in order to have
one...and Google doesn't even get royalties back to cover part of the costs.

Indeed, considering the very real possibility of patent licensing fees,
Microsoft may even get a slice of every hand set Google sells.

On the other hand, considering that Nokia is and will continue to feature
Windows Phone in their advertising, Microsoft is likely to further benefit
from the expenditure.

~~~
TylerE
It was my understanding that the Motorola purchase was solely about acquiring
patents, and did NOT include the hardware side of the business at all.

~~~
nkassis
No I believe the hardware side of the mobile division is included. But that
was just a bonus (or a curse?) for Google who, as you said, just really wanted
the patent.

~~~
technoslut
I'm not so sure anymore that was Google's only intent. Google may be later be
forced to become an OEM. As of today, it's quite a reality that Samsung (who
sells 55% of all Android smartphones), Amazon, Facebook and Baidu won't
completely fork Android in their own best interest. It may behoove Google to
develop a Nexus line that covers a wide range of prices.

------
justincormack
It is not clear if they expect the platform support pyments to be larger or
smaller than the software royalty agreement, ie whether they are paying
Microsoft in the long run or vice versa. I guess it may depend on sales to
some extent, although it ways there is also a minimum royalty.

~~~
hencq
Eventually yes I guess, but I think it might be a while before Nokia end up
paying Microsoft (in net terms anyway). Microsoft are probably more interested
in gaining market share at this point, so I wouldn't be surprised if there's
more money flowing Nokia's way in the coming quarters.

~~~
brudgers
Keep in mind that Nokia's advertising is featuring WP7, and Microsoft is
benefiting from that.

------
rbanffy
If Microsoft pays Nokia a fixed amount for using the OS on a certain number of
models while Nokia pays Microsoft a variable amount proportional to phones
sold, it's very easy to see Nokia's best possible scenario is to sell just
enough phones to cover the production costs while keeping as much of
Microsoft's money as possible. RIght now, the odds of outselling Android and
iPhones are very slim.

Considering sales volume, I'd say Nokia is right on target. Elop may prove
himself a genius, after all.

~~~
brudgers
Long term, the odds of WP7 outselling both are better than slim because
Microsoft was thinking about the low end market when they designed WP7.

There are two standard screen sizes, 800 x 480 and 400 x 480 which is well
suited for cheaper commodity devices.

Nokia sold 93 million commodity devices last quarter (that's about half the
number of iPhones ever sold). The market is huge and neither Android or iOS is
likely to go there.

Android won't because the development costs of adapting the OS to small low
margin commodity devices would be borne by the manufacturers and carriers, and
iOS won't because of Apple's branding strategy.

Nokia recognized that its core competency was manufacturing and hardware
design, not user interfaces and software development. Considering that they
were probably better at both than any other handset manufacturer, it is
probable that other handset manufacturers will follow course, should Nokia see
even moderate success with their strategy.

[edit] Nokia has sold 1.5 billion S40 devices. WP7 is what will replace them.

~~~
ZeroGravitas
Android is already on the low end commodity devices. And those manufacturers
and carriers (i.e. prepay or non-US) don't seem that fussed about adapting
Android, they just use stock. So it's only really the chip suppliers who need
to get Android working.

And here's a good example of that:

[http://armdevices.net/2012/01/19/rockchip-rk2918-ice-
cream-s...](http://armdevices.net/2012/01/19/rockchip-rk2918-ice-cream-
sandwich-smartphone/)

MediaTek, who Elop cited as eating Nokia's low-end market by suppling chips to
no-name brands in his "burning platform" memo also have been working on
Android for a while and have partnered with Google to make GoogleTV (i.e.
Android) chipsets too.

~~~
rbanffy
My only complain is that the phone disintegrates during the interview.

The other phones look a lot like Nokia's offerings.

~~~
ZeroGravitas
Yes, attaching a retracting security connector to a removable battery cover
wasn't a particularly smart move.

I also noticed the Nokia knock-offs in the background. Though I'm not sure if
any of the phones are built by the chip maker themselves as ODM samples or if
they're provided by customers who've bought their chips.

There's another video here with a better look at the Nokia-alikes as well as
the tablets they're powering and it's more obvious that they've gathered
together products from a range of low end brands that they've sold chips to.

<http://youtu.be/Hlm1VM_aF3k>

------
nantes
So, I have to wonder, does this mean Microsoft makes more from Android
royalties than Windows Phone royalties?

~~~
groggles
Probably, given that Microsoft has never made money on Windows Mobile --
minuscule licensing costs coupled with a high engineering price. In their
brightest expectations I don't think they see themselves making money with it.

Microsoft's mobile efforts have always been about the ecosystem. Office,
Exchange, Windows security technologies, and now the xbox platform (though I
still marvel that having your xbox achievements available for perusal was
thought to be a big feature of WP7). Given that approach, Android can serve
that purpose even without royalties.

~~~
technoslut
>In their brightest expectations I don't think they see themselves making
money with it.

If MS defeated Android there is no question that they would raise the price of
the licensing fee. Since they won't MS is faced with the reality that, while
they are making money now, these patents won't last forever.

------
vsl2
Don't see how a measly (relatively speaking for these giant companies) $250M
should have been a major factor for Nokia to choose to focus on Windows Phones
rather than Android.

Apple and Google are dominating the smartphone OS market and I don't see how
two slow-moving companies will make a serious dent in the consumer market. How
many people wold would give up their iPhone for a Windows phone, especially as
an early adopter? I'd be very surprised if any Windows Phone gains serious
traction with consumers.

The best shot I see for Windows Phone success would be in the enterprise
market where easy/free compatibility with MS Office products and other MS
products used at work could be a large benefit. But Apple is making headway
here as well so it could all be for naught.

~~~
guelo
Microsoft is gigantic, rich and relentless, they do not give up. Look at the
amounts of cash they've been burning on Bing for years patiently waiting for
their opening. You should not never count them out.

~~~
vsl2
You make it sound like its inevitable that Bing will be a huge success just
because Microsoft can burn money. Its has made inroads, but my guess is that
it has reached its peak.

I'm not counting on Microsoft giving up on its products - I just see them as
patiently burning through cash (generated from its successful cash cows)
without making a significant splash in mobile. Just because they can afford to
throw away money doesn't mean that they'll be successful at all of their new
ventures.

This isn't exclusively a Microsoft thing either. Look at Google and its
multiple attempts at new products (Wave, Buzz, Google+). They can obviously
afford it because of their own cash cow, search.

~~~
guelo
No, I didn't say it was inevitable, I said don't count them out. But you make
it sound like it is inevitable that they won't ever become a threat.

~~~
vsl2
I DO think that it is inevitable that Microsoft won't become a threat so I
stated my opinion and gave my reasons for it. Your reason that I shouldn't
count them out was solely because they have cash to burn and have shown a past
willingness to burn it. My reply to you is that such willingness does not mean
that they will ever contend in this market.

~~~
guelo
OK fair enough. We simply disagree on the possibility that Microsoft can get
its act together. I think in the longer run it is possible.

------
sylvinus
Note that $250m just seems to be the quarterly fee...

------
thinkling
Back in 1997, Microsoft invested $150m in Apple along with a release of Office
for the Mac. That worked out pretty well. Now after a bit of inflation, it's
$250m and a release of Windows Phone.

~~~
badclient
Sarcasm?

 _That worked out pretty well._

If not snark, I must disagree. It was a very poor competitive investment which
is only justifiable if the gov "cornered" MS into making it over anti-trust.

~~~
justincormack
It would have been an excellent investment if Microsoft had only kept the
shares...

~~~
badclient
Seeing Apple _dead_ would be the best case for Microsoft. The investment
accomplished the opposite.

~~~
rbanffy
Quite simply, no. Without Apple, Microsoft would have an unquestionable
monopoly over personal computer operating systems it was (and is) actively
leveraging to gain competitive advantages in application software. That would
create lots of restrictions Microsoft wasn't comfortable with.

The best scenario would be a niche-player Apple. In personal computers, it
still is, but the "post-PC" products it introduced have a good potential of
turning Microsoft into a niche-player as PCs go the way of the dodo.

~~~
groggles
_That would create lots of restrictions Microsoft wasn't comfortable with_

The most likely scenario was that Microsoft would have been broken up, which
while it was unwanted by Gates would have likely led to a _much_ more valuable
set of combined parts today. Microsoft was the #1 software engineering
powerhouse, but they always managed to sabotage their own efforts (force
integration where it was detrimental, alignment to a core strategy that often
meant that they saw themselves as their biggest competitor, etc).

If Microsoft didn't help Apple, and Apple hypothetically disappeared, today we
would likely have a lot more mini-Microsofts in our lives.

------
cooldeal
Old news? [http://www.businessweek.com/news/2011-03-07/microsoft-is-
sai...](http://www.businessweek.com/news/2011-03-07/microsoft-is-said-to-pay-
nokia-more-than-1-billion-in-deal.html)

Also, it's 250M/quarter.

The real news is that Nokia sold over a million Lumia phones over 2 months of
launch in Europe and is launching the Lumia 900 in March on AT&T for $99 on
contract.

[http://www.forbes.com/sites/ericsavitz/2012/01/26/nokia-
rall...](http://www.forbes.com/sites/ericsavitz/2012/01/26/nokia-rallies-
on-q4-results-lumia-unit-sales-top-1-million/?partner=yahootix)

[http://www.forbes.com/sites/greatspeculations/2012/01/26/mic...](http://www.forbes.com/sites/greatspeculations/2012/01/26/microsoft-
ready-to-wage-war-against-apple-google-with-nokia-lumia/?partner=yahootix)

~~~
dpark
> _lauching the Lumia 900 in March on AT &T for $99 on contract._

That's not "the real news". It's speculation. You even pulled it from a blog
titled _Great Speculations_.

~~~
cooldeal
News in the sense, something new to report on. Anyway, two reliable sources
say March 18th. BGR and Winsupersite.

Looks like Winsupersite is banned on HN (too many fanboy flaggers?)

[http://www.bgr.com/2012/01/25/atts-q1-2012-roadmap-nokia-
lum...](http://www.bgr.com/2012/01/25/atts-q1-2012-roadmap-nokia-lumia-900-to-
launch-march-18th-for-99-99/)

[http://www.winsupersite.com/article/paul-thurrotts-
wininfo/e...](http://www.winsupersite.com/article/paul-thurrotts-
wininfo/exclusive-microsoft-nokias-plans-marketing-windows-phone-2012-141784)

~~~
raganwald
Speaking of speculation, you have ZERO backing for your conjectures about why
posts from Winsupersite get buried or simply don't make the front page.
Furthermore, insulting your fellow users by calling them "fanboys" is not in
the best traditions of Hacker News.

Update: The problem here is that we have anonymous/opaque voting, moderation,
and flagging. Without showing me a collection of stories that received massive
upvotes but never made the front page, we have no evidence of moderation or
flagging, just evidence that your interests are in the minority.

If we did have such evidence, all we could say is that moderators had decided
that such articles do not belong here, or that users felt they did not belong
here, but we can't distinguish between the cases. Without being able to
establish that there are users who consistently flag such articles, you have
no argument.

If we did have some way of identifying which users were flagging such
articles, how would you propose to back up a claim that they are "fanboys?" Do
you have a definition for this term other than "Disagree with you?"

Without a lot more evidence, I simply can't take your speculative aside as
more than a broadly aimed piece of abuse directed at people who don't share
your enthusiasms.

~~~
cooldeal
>Speaking of speculation, you have ZERO backing for your conjectures about why
posts from Winsupersite get buried or simply don't make the front page

Try submitting a story from Winsupersite, it will be instantly dead. That
either means it was heavily flagged in the past that the system auto-kills any
submission from it, or it was singled out by a moderator.

>Update: The problem here is that we have anonymous/opaque voting, moderation,
and flagging. Without showing me a collection of stories that received massive
upvotes but never made the front page, we have no evidence of moderation or
flagging, just evidence that your interests are in the minority.

Eg. see this post complaining but no action was taken.

<http://news.ycombinator.com/item?id=3408883>

I am not even complaining that the stories are not voted up, it is that
they're completely banned. If it was Daring Fireball(Winsupersite is basically
the Microsoft equivalent of that) that was banned, HN would go completely
ballistic.

Not to mention that fact that Gruber's deprecating and sometimes misinformed
takes on important Microsoft announcements get more traction here than the
actual news itself.

Do you really see anything on that site which makes any submission to it
instantly dead other than that it's Microsoft-centric reporting which seems to
be its only sin?

~~~
rwolf
I too was interested in the daringfireball comparison:

* <http://www.alexa.com/siteinfo/winsupersite.com>

* <http://www.alexa.com/siteinfo/daringfireball.net>

At about twice the rank and 3 times the inbound links, it looks like Reality
itself is a fanboy.

~~~
cooldeal
How is that relevant? Did I say Winsupersite was popular?

A bad Alexa rank causes the site to be banned on HN?

