Back in February Nokia “signed the definitive agreement” with Microsoft that made Windows Phone their primary smartphone OS. In their Q4 report today it was revealed that Nokia has successfully sold “well over” 1 million Lumia device to date – the Nokia Lumia 800 went on sale November 16th in the UK.
In the past we’ve heard various rumours that HTC and Samsung pay a license fee to Microsoft for using Windows Phone. Late last week ZTE commented that they dish out $27 per Windows Phone it makes. However, the deal between Nokia and Microsoft is somewhat different. The relationship is intertwined in many ways: OS, Maps, advertising, development tools, Bing search. Surprisingly, in the Q4 report today it stated that Nokia “received the first quarterly platform support payment of USD 250 million”… this means that Microsoft could pay Nokia $1 billion/yr. In addition, the money to Microsoft is also flowing. Nokia will pay the “minimum software royalty” to Microsoft for Windows Phone, but no word on what the dollar amount is. The report also boldly declared that the platform support and royalty payments between the companies “are expected to measure in the billions of US Dollars”.
“Our broad strategic agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft. In the fourth quarter 2011, we received the first quarterly platform support payment of USD 250 million (EUR 180 million). We have a competitive software royalty structure, which includes minimum software royalty commitments. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US Dollars.”
I remember reading the news when the deal between the two companies was officially announced. Nokia stated that “There are other mobile ecosystems. We will disrupt them. There will be challenges. We will overcome them. Success requires speed. We will be swift”. Selling over 1 million Windows Phones is a good start, but there’s still much more hard work ahead.