Nokia finally signs deal with Microsoft to push ecosystem

Nokia today announced that it has finally signed an agreement with Microsoft. This is a definite step by both organisation to build a new global mobile ecosystem that is unlike any other. Earlier in the year, Nokia announced its strategic alliance with Software giant – Microsoft – to build a third ecosystem outside Android and Apple IOS. This received mixed reactions from various analysts. Many believe that Nokia should have pitched its tent with Google, the promoter of Android, as against trying to build a new ecosystem.

But with this announcement, it is clear both companies have collectively moved from intent to agreement in such a short period. The press release made available on Forum Nokia blog states that both companies have aligned their teams and assets, and clearly see the potential to change the way people use their mobile devices for the better. However, Nokia Window phones are still not expected to be delivered until 2012 although the pressure is on for first delivery in 2011.

According to Microsoft’s press release, the relationship is structured around four broad areas:

  1. A combination of complementary assets, which make the partnership truly unique. Nokia will deliver mapping, navigation, and certain location-based services to the Windows Phone ecosystem. Nokia will also build innovation on top of the Windows Phone platform while Microsoft will provide Bing search services across the Nokia device portfolio as well as contributing strength in productivity, advertising, gaming, social media and a variety of other services.
  2. Microsoft will receive a running royalty from Nokia for the Windows Phone platform, starting when the first Nokia products incorporating Windows Phone ship. The royalty payments are competitive and reflect the large volumes that Nokia expects to ship, as well as a variety of other considerations related to engineering work to which both companies are committed.
  3. In recognition of the unique nature of Nokia’s agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars.
  4. An agreement that recognizes the value of intellectual property and puts in place mechanisms for exchanging rights to intellectual property. Nokia will receive substantial payments under the agreement.

Despite this huge step towards making this alliance to work, the huge task that lies ahead of these two companies is how to convince the thousands of developers that already have reservation about Microsoft. This is, however, good news to the consumers who now have more options to choose from  when it comes to mobile phone. Only time will tell if this alliance is actually the right step by both companies.

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