Nokia to get 'huge' payments from Microsoft

a) Nokia thought they could not differentiate enough with Android so they did not choose it. Then they said they will not customize the WP7 experience - so they would essentially differentiate on hardware/pricing alone. No reason they could not do the same with Android.

b) To let go of a significant capability such as developing their own smart phone OSes and UIs - however unsuccessful they may be in the market - and betting your business on an as-yet under performing platform takes some amount of stupidity.

c) Most of what Nokia sells today are not your typical smart phones. They are losing ground to people going Android and dumping their Nokia feature phones. But they still do not seem to have a "different" strategy for low end devices targeting the developed world and dumb phone users in developed world. WP7 is not it AFAICS. Both Google ($85 dual core Broadcom SoC) and Apple (with the recent rumors of half-iPhone for sub $200 unsubsidized) have a solid plan in place to attack that segment. It is a glaring omission from Nokia and WP7 strategy - especially so since that is an under explored market and they have the highest chance of succeeding. Even if they hope dumb phone users will somehow upgrade to premium WP7 handsets - they are still late to the game.

c) Nokia's competitors who have some WP7 footprint today - how they will react tomorrow? Microsoft hasn't made any special deals with HTC/Samsung for example and their special treatment to Nokia is so close enough to them buying and running Nokia that those guys are going to be forced to rethink their WP7 strategies unless Microsoft offers them something to level the playing field.

d) Microsoft paying them money sounds good in the near term but it comes at a cost of Nokia crippling themselves and risking a whole lot on Windows Phone 7 and Microsoft. The dependence on Microsoft is a huge deal - HP could've done that but they thought it was wiser to buy Palm and bet on their own capability.

e) Why was it so hard to execute? Elop lost a golden chance of understanding this and fixing it. They won't have to execute on OS development now but still there is hardware and software integration work to do that requires lot of execution - they aren't simply going to dump hardware on Microsoft and let them deal with it. It wouldn't scale if Samsung/HTC and others expect the same.

I assumed it was an up-front deal which is more than covering the cost of Nokia getting the OS onto their hardware and maybe covering some cost of x-number of minimum handset licenses. Beyond that amount, I would think that Nokia would be paying microsoft per handset.

You think that's their plan? You think Microsoft is naive enough to let it happen? If the short WP7 history is any clue - it's not going to be easy for Nokia to differentiate at all.

>And to point "c" -- that there is a "glaring omission from Nokia and WP7 strategy -- dude, it was made public like 4 days ago.

Way to miss the point - "dude". That is eons+4 days late - which boils down to the same fact - they still do NOT have a "strategy" - which means the Microsoft deal was made without thinking through the strategy - Is it going to be Symbian or S40 or WP7 Starter Edition on low end devices to compete with iPhone Mini and Dual Core $29 Androids? And that's where Nokia is hurting right now. They could make a me too WP7 device and there is a fair chance to fail there - but if they made a capable low end device that does most of what iPhone 3GS and LG Optimus does - they have real chance of getting somewhere.

After all, most of their R&D budget is in software development. They have developed two dumbphone OSes (S30, S40) and two smartphone OSes (Symbian, Maemo), which are feature-by-feature the most complete software in the market. There's lots more of course.

But their software sucks.. Why?

As I mentioend in the comments of the other post, I believe the whole "Nokia will get billions" is a misunderstanding from the reporters.

Elop was speaking about Nokia getting substantial monetary value, measured in Bs not Ms. I don't think he was speaking about money changing hands.