Microsoft will be paying Nokia more than $1 billion for promoting and developing smartphones based on the Windows Phone 7 platform, it has been revealed.
Citing two people with the knowledge of the deal, Bloomberg reports that the Nokia-Microsoft deal will see Nokia paying Microsoft for every copy of Windows Phone 7 used in its smartphones while the pay-out by Microsoft will help Nokia reduce its own software development budget.
Nokia's shares have depreciated by more than 26 per cent ever since it announced that it would be developing phones for Microsoft. Together Nokia and Microsoft hope to infiltrate the smartphone market with their own devices to take on Apple, Google and RIM.
Microsoft's six-month-old Windows Phone 7 platform has a lot of ground to cover before it reaches the level of iOS and Android. The company is expected to pay some part of the $1 billion before Nokia starts offering WP7 smartphones.
Nokia chief Stephen Elop had said when the deal was announced that Nokia will benefit by billions of dollars but had failed to divulge a specific amount.
Colin Gillis, an analyst at BGC Partners told Bloomberg, “This gives Microsoft scale and allows Nokia to rip out costs. Microsoft is getting the platform boost that comes from acquiring a Nokia for about a billion dollars.”