Microsoft to pay Nokia more than 1 billion dollars in research and development promotion fee

According to foreign media reports, two sources said that under the agreement, Microsoft will pay Nokia more than 1 billion U.S. dollars to promote and develop the Windows Phone operating system of smartphones.

One source said Nokia would pay Microsoft for software licensing fees and would not increase its spending because it saved the budget for its own research and development software. The agreement is valid for 5 years.

If the partnership succeeds, it will not only help Microsoft and Nokia resist competition from Apple and Google, but also win the economy. Nokia's share price fell by 26% since Microsoft and Nokia February 11 announced their intention to co-operate, indicating concerns about Nokia's adoption of Microsoft's mobile operating system. Microsoft Windows Phone 7 was released less than six months ago, with a market share of just a few percentage points.

Last year, Nokia's operating profit rate slipped from 19% to 4.9% from 10 years ago, and Nokia needed to cut costs to prevent further declines in its operating profit rate. Sami Sarkamies, analyst Sami Sacames of the Nordic Union Bank, said that in 2011 and 20,122, Nokia could cut its equipment and services development budget by about one-third per cent on the basis of about 3 billion euros last year.

Microsoft spokeswoman Melissa Havel Melissa Havel declined to comment on the specific terms of the agreement. Nokia spokeswoman Lauri Armstrong Laurie Armstrong said the two sides have yet to sign a formal agreement and will disclose the relevant information to the outside world after signing a formal agreement.

A source said that even after paying Nokia huge promotional fees, Microsoft will be profitable because Nokia pays for software license fees. Microsoft will pay part of the cost before Nokia starts selling Windows Phone handsets, which means Microsoft will take on some upfront costs.

Microsoft shareholders want the company to drive growth in the mobile software business and to control costs. Microsoft did not separately list the performance of the mobile software business in its earnings reports. Steve Ballmer, Microsoft's CEO, faces pressure from board and shareholder Ballmer to increase mobile software sales after market share has been eaten away by Apple and shareholders.

Agreeing to pay more than $1 billion trillion is part of Microsoft's strategy to prevent Nokia from choosing an Android operating system, one source said. Other reasons for Nokia's choice of Windows Phone 7 include less time than Android, fewer manufacturers of Windows Phone 7 handsets, and a greater opportunity for Nokia to "get ahead". Microsoft will also be granted the right to use the latter's patents to pay Nokia money.

As part of the deal, Microsoft will use Nokia's Navteq map products in location-based services, local advertising and group buying services that will also generate revenue for Nokia. Andy Lees, Microsoft Executive Andy Lis, said last month that two companies would also share revenue from search advertising business.

Peter Klein, Microsoft's chief financial officer, said at an investor meeting last week that the revenue from these services was important for both sides to Peter Klein the deal. One source said the service would bring Nokia $ billions of trillion in revenue throughout the agreement.