According to Bloomberg, Steve will pay Nokia Oyj more than $1 billion to promote and develop Windows-based handsets as part of their smartphone software agreement. In turn Nokia will buy Windows for its phones.
There are other benefits in the glorious five year plan. Nokia will not have to spend cash on R&D and Ballmer has a big customer for his Windows Mobile OS. Nokia’s royalty payments will Ballmer make a profit on the accord even after the payments to Nokia.
It also kept the outfit from moving to Android.
Some of the payment to Nokia would be made before the company starts selling the phones, meaning Microsoft bears some upfront cost in the partnership.
Both sides need the deal to work and many of Nokia’s shareholders think the outfit has signed up to a Ballmer albatross which does not even come with wafers.
Nokia shares dropped 26 percent since the accord was unveiled February 11.
Another interesting thing from the deal is that it gives Redmond Nokia’s patent portfolio. Ballmer gets to use Nokia’s Navteq mapping products for functions such as geolocation services and selling local advertising and coupons tied to a user’s position.