Ina Fried

Recent Posts by Ina Fried

After Getting Hundreds of Millions of Dollars From Microsoft, Nokia to Start Paying Redmond

There was a doozy of a footnote in Nokia’s earnings report on Thursday.

Since signing its deal to go with Windows Phone in February 2011, Nokia has been getting $250 million per quarter in “platform support payments” from Microsoft. Nokia also pays Microsoft an unspecified amount of royalties for using Windows Phone. It varies based on the amount of phones Nokia ships, and there are also minimum commitments. Over the life of the deal, Nokia and Microsoft have said there will be billions of dollars going between the two companies.

The interesting part is that Nokia says that, after initially getting more from Microsoft than it pays, Nokia’s commitment to Microsoft is now more than the remaining amount that it can expect to get from the software maker.

“Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments,” Nokia said. “To date the amount of platform support payments received by Nokia has exceeded the amount of minimum royalty commitment payments to Microsoft. Thus for the remainder of the life of the agreement the total amount of the minimum software royalty commitment payments are expected to exceed the total amount of the platform support payments.”

So, to recap, Nokia has bet the business on Windows Phone. After getting a pile of money initially, it now owes Microsoft more than it can expect to get. And Microsoft might be doing a competing Windows Phone of its own.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik