New details are out this afternoon on the financial terms of Microsoft’s partnership with Nokia — confirming once again that it ain’t easy, or cheap, to outbid Google.

Bloomberg News, citing two unnamed sources, reports that Microsoft has agreed to pay Nokia more than $1 billion to “promote and develop” Windows Phone devices under the agreement between the companies. Bloomberg says the agreement for the payment was “part of a campaign by Microsoft to keep Nokia from choosing Google’s Android operating system.”

To put the figure in perspective, it amounts to 5 percent of Microsoft’s $18.7 billion in profits last fiscal year. The Redmond company spent $13.2 billion on sales and marketing in fiscal 2010, and $8.7 billion on research and development.

Nokia, the world’s largest smartphone vendor, agreed to make Windows Phone its “principal smartphone strategy” under the partnership announced last month. Microsoft, which had been early entrant in the smartphone market, is trying to regain its momentum with the new Windows Phone operating system.

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  • Jake Root

    The more the merrier! I am seriously excited to see what Nokia is going to bring to the table.

  • Anonymous

    What really matters is when can I play Cut the Rope on one of these things.

  • pw

    wrt: “The Redmond company spent $13.2 billion on sales and marketing in fiscal 2010, and $8.7 billion on research and development”. Wow!!! It might be old news to others, but I am shocked that Microsoft spends more on sales and marketing than on R&D.

  • Pamela Hayes

    This article should be titled “Struggling for Relevance: A Tale of Two Failing Giants”

  • Tim

    Ask Danger how that worked out?

  • Anonymous

    Microsoft needs as many phone manufactures on board with their OS as possible. With the weight Nokia has in Europe, if it takes that much money to push them into your direction and you see that has a priority for your business … do it.

    Nokia makes high quality hardware which Microsoft is in need of for Windows Phone 7. I’m sorry the handsets available from HTC just don’t cut it from a quality and look perspective. This statement coming from an HD7 owner.

    The Nokia prototypes that floated around after the announcement looked very nice.

  • Mr. Roboto

    When you try to cuts costs on R&D and fall behind, it costs you more in the end. At some point the MS Board will recognize that this equation does not add up in the long run.

  • TheBoholStandard

    Nokia and Microsoft’s joint effort is a force to reckon with. In the end, it is good for us, customers. We also react about it at

  • :::::: New Space Agency ::::::

    it’s hard to save WM7 from death … but it’s even harder if MS believes to save it only with its money without any new ideas nor product innovation

  • Joe the Coder

    This is actually a smart move. It is pretty clear to me that there isn’t room for 5 platforms in the smart phone space so by uniting they are increasing their chances.

    Whether there is room for 3 or 4 is open to debate. I truly hope there is room for at least 3. Number 3 being RIM or MS will be an interesting story to watch. Right now, RIM has the position but they are fading really fast.

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