Nokia’s Turn To Pay Microsoft; Licencing Fees Now Greater Than $250 Million Quarterly Donation

| January 24, 2013 | 211 Replies

DSC01507One of the bright sides of Nokia joining the Windows Phone entourage was the fact that Microsoft agreed to shell over a quarter of a billion dollars per quarter. This effectively had given Nokia an edge over all other WP OEMs seeing how for the past year they were operating at an almost no cost expense to use Windows Phone; or in fact were making money by using the platform.

However with the increase in Lumia sales (4.4 Million) the tides have turned, seeing that the amount of software royalties Nokia has to pay has for the first time exceeded the 250 Million quarterly payout by Microsoft; but this is a small price to pay for success; one that Nokia can now afford seeing how they’re officially in the black again.

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Also it’s likely that Nokia will be receiving a bit more payout in the future due to licensing Nokia Drive to other WP8 OEMs; which should once again give them an advantage over other OEMs.

Of course this could explain why Nokia are interested in continuing to produce WP 7.X devices (such as the 505 and the 510 etc.) seeing how the licensing fees are sure to be less than those for WP8.

Source

 

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Category: Lumia, Nokia, Windows Phone

About the Author ()

Hey, my name's Ali- Currently a fifth (and final) year Dental Student from Chicago; studying in Jordan. I love all sorts of gadgets almost as much as I love my cookies! Be sure to follow my Twitter handle @AliQudsi and Subcribe to my Youtube for the latest videos - no pressure. Thanks.
  • xxx

    “Nokia has to pay has for the first time exceeded the 250 Million quarterly payout by Microsoft; but this is a small price to pay for success” – WTF? Asha is earning money to pay Ms for WP crap? 4 mln Lumias isn’t any success. It’s a disaster. They sold less smartpfones than in 2011.

    • mirco

      Please, read the news again! Not the Asha phones are earning the money to pay the WP licenses but the Lumias on their own.

      • Jiipee

        No they are not. There are factual errors in Ali’s text.

        Until end of year MS platform support payments have been slightly more than the minimum license fee that Nokia has paid to MS. You can verify this eg from Nokia’s Q2/2012 quarterly report. The original “Nokia receiving platform support payment of billions” was just a hoax.

        What they say here is that in the future MS will get more than Nokia.

        Why Nokia is back on black? Thanks to NSN and Asha range. Smartphones are still making hefty negative ebit. What was also told is that Nokia has been channel stuffing (again?). Ie the 4,4 mio Lumia’s are partially sitting in the sales channel. And they most probably are WP7.

        If you calculate 180 mio license fee per device sold 4,4 mio, Nokia has in fact paid 40€ for each device. One can only assume that they expected to sell at minimum 12 mio Lumia’s a quarter to reach 15e per device license.

        Location and commerce business is making loss.

        Android license would have cost probably 0€ including MS patent fees since Nokia has strong patent portfolio.

        • Pasanen oli hieno mies

          Android could have worked but the problem is that Nokia was, yes, too arrogant to use it.

          This is how Nokia commented Android only in Sep 21st 2010.

          “Why doesn’t Nokia switch to Android? Because Google’s software represents only a short-term solution that will lead to bigger quandaries down the line, says he. Anssi was even graceful enough to illustrate this point with a vivid example, saying that mobile manufacturers who go the Android route are doing no better than Finnish boys who “pee in their pants” for warmth in the winter.”

          Android was invented by Google and that was not something the arrogant Nokia was in position to tolerate.

          People don’t seem to understand how big of an issue Nokia’s arrogance really was. Yes, I know you do, but most people here don’t seem to understand that.

          • bhairav

            Name one company except samsung which is making continious profits on android without loss till date HTC,Sony are now suffering from losses they just are not showing it yet

            • GordonH

              How many times do you Elop fanboys call this question? It’s getting lame.

              • RIM

                Name one company that made a profit with wp ever……?

                • incognito

                  Microsoft, tho it’s questionable with their ‘support’ expenditures and marketing efforts.

              • migo

                We’re not Elop fanboys, we’re just sensible. Android isn’t this magical solution. It’s great for Google, and great for Samsung, and that’s about it. Huawei also looks to be growing the same way HTC did with Windows Mobile, so there stand to be a few other beneficiaries, but more companies are losing money with Android than are making money.

            • Jiipee

              So in your opinion Nokia brand does not have any value over Samsung, Swipe UI more interesting than Samsung’s, industrial design better than Samsung’s, better home brew apps against Samsung.

              If WP catches up, Samsung will be there.

          • migo

            It’s not just arrogance, it’s strategy. Nokia was trying to get into the ecosystem game before Google was getting into the smartphone game. That’s what Ovi was about, they went around doing a bunch of acquisitions to get there, but it didn’t work out for the most part.

            What did work out was Maps. With Android they would have had to agree to ditch it and offer Google Maps instead, which would have completely cancelled out their investment in locations.

            With Microsoft, they’re able to continue developing it, and are even getting to put their maps platform on non-Nokia Windows Phones. That’s a huge benefit for them, as they get to continue growing it, and if they go to a different platform, they can take that with them.

            Android as a result would be a permanent change for them, whereas Windows Phone can be a temporary one. With PureView they’re back in the running for cameras, and with Here they’re one of the top players for locations. That means any smartphone platform they choose to move to will immediately have a great location service and great camera hardware.

            Long term, for Nokia, Windows Phone was a better choice than Android. (Although, once again, webOS would have been a better choice than Windows Phone).

            • Trexus

              WebOS? That’s hilarious…
              Just goes to show what sort of poo you’re full of.

  • mdev

    Hmm… 250 divided by 4.4 = almost 57 USD?!

    WTF? 57 USD for one WP license? This is insane!

    • Noki

      no its worse they paid, so its not the full 4.4 its lesss it took less than 4.4 to deplete the 250 M

      This is crazy, imagine lumia becomes successful nokia goes bankrupt, how in the name of any God or “religion” is nokia going to make wp scale into the sub 200% area, 60′s $ is way more than the profit nokia makes there…

      • Pasanen oli hieno mies

        I suppose you would like to see Nokia using Symbian and going under because developing Symbian takes so much money?

        Do you know what is flat rate?

        You can call your Symbian God or religion to help with all this, but the rest of us will probably just wait and see what happens.

        Yes?

        • Ujwal Soni

          Android is free

          • Pasanen oli hieno mies

            Nokia was too arrogant to use it.

            Remember that Nokia was claiming in late 2009 how Android is not a success and it’s just hype.

            It would have been too hard for them to admit how Google succeeded and Nokia failed to deliver a mobile OS with Linux core.

            This is very sad. Fortunately WP may succeed and Nokia has some really nice success with Asha.

            • Gary

              The sad part is Maemo / Meego were/are FAR better than Android is now!

              • migo

                Ehh, no. Maybe better than gingerbread, but that’s it.

                • Sammy

                  Waaay better than GB, & fully competitive with the latest iterations if resources didn’t begin dropping dramatically, even before the 1st bridging device was out.

            • Jiipee

              Spede, you are true magician.

              You’ve been correct all the time: channel stuffing, continuous decrease in market share… Oh sorry, you were talking about OPK era, not Elop era. In the latter you could add also continuous losses and bad sourcing strategy resulting in component shortage.

              • Pasanen oli hieno mies

                Channel stuffing is sometimes hard to prove. Well. Just ask Tomi Ahonen about it. He will probably say that it didn’t happen in Q4 2010 but it’s happening now.

                Ollila started all this misery. OPK was counting beans instead of creating great products and Elop has not succeeded in cleaning the mess. There is something funny about this. You can blame almost anyone and find a person who mismanaged Nokia in some way.

                Yes, or should I say haha?

                • Jiipee

                  you may choose ;)

                  Did you notice the latest addition to the board? Again some second tier accountant. Dont they ever learn? Risku made good summary on the board and bod in his book. Mostly accountants and signal processing engineers.

                  • Pasanen oli hieno mies

                    Yes, that was interesting one. I heard someone yelling how Nokia is going to make condoms because of that person.

                    Nokia should hire some logistic experts. They are apparently failing on that.

                    • jiipee

                      You very well know the reason for supply chain problems.

                      It’s pity that you sometimes have valid points, but then down them in sheer trolling.

                    • Pasanen oli hieno mies

                      That was what I actually had in mind. It’s a part of the logistics chain to ensure that they have enough components. Apple has been working on this and while they have some problems with getting components, it’s not happening too often.

                      I think back in the 90′s Nokia had some serious problems with getting enough components and they ensured the availability of the components by adding those to the logistics chain. That solved lots of problems and made possible the success Nokia had in the late 90′s and early in the next decade.

                      I hope this explains what I had in mind and you don’t have to feel that I’m trolling.

                      About yelling those condoms? That was the not so serious part of the message but it really happened. One local newspaper had a headline telling that Nokia has hired an executive from a condom company, or something like that. After seeing that headline I heard one person to yell how Nokia is going to make condoms. It’s true, but nothing too serious.

                      However that person had one valid point. It tells lot about the mindset people have if they make headlines like that or they yell that kind of comments.

                      But mostly it was nothing too serious.

                    • jiipee

                      There was a proper article on the new addition to the board. It confirms that Nokia will not be making condoms, since she is already being sacked and she probably has non-competitive terms in her package ;)

                      About the logistics. The logistics problems Nokia had were related to bad ERP and burning of a major suppliers factory in Europe (might have been Philips/Siemens, cannot remember). Thanks to the chief of logistics, he ensured supply and established strong supply chain systems in Nokia. That was true competitive edge agains Ericsson and helped Nokia to beat them. (some inaccuracy might exist in the above).

                      The current supply problems, my best guess is, are related to the WP strategy. (yesyes, hahaha, Symbian religion…) When they chose the path to go all in to WP, Nokia should have made sure that there are more options for hw. Currently they are dependend on Qualcomm to which Microsoft seems to be in very close terms and might not hurry the support for others. I read somewhere that eg GSIII uses the very same chips as 920/820. One does not have to be big business guru to aknowledge, who will have the priority being served. Nokia has not disclosed what components they are missing and I might be wrong in my assumption. In any case, sourcing department cannot ensure decent supply on their own – it is in Nokia’s case primarily a choise of technology. They might have been having similar problems with Meego, but not Android. In Meego’s case, the hw adaptation was already done for some STEricsson chips and Android is the default platform to do hw adaptation automatically. A good thing is, that according to rumours, there will be more broad support in the future. Still they have had more than two years to work on it by now.

                      If the ASP what Nokia gets for 920/820 is 400e and their average gross margin was on Q4 18%, which would be the minimum, they’ve lost only few 50-200 million EUR in GM/EBIT.

            • Jiipee

              They needed to either get over their MS fear or become humble and accept Android. Interesting to hear, who made the call

          • senshi

            Android is NOT free!

            Using Android would certainly mean having to pay MS for the FAT license, you know like pretty much every other Android OEM is currently doing!

            • Jiipee

              Is samsung paying? Did Nokia pay for Symbian or Maemo? If not, what is different with Android? Nokia has stronger mobile patent portfolio than MS.

              • senshi

                Actually Samsung IS paying Microsoft licensing fees for Android devices.
                http://goo.gl/ZmyL2

                So even if Nokia uses Android the best scenario is a cross-licensing deal which still means Nokia has to pay something and thus definitely make Android NOT a free option for Nokia.

        • Noki

          care to enlighten us what “flat rate” is? because that is not what the article suggest at all..

          #Note I think something is serious wrong with this picture it is completely crazy.

        • Oreg

          Are you dump or what? How many do you think a developer earns per quarter if you think they spend more to the Symbian development team than 250m.

        • Deep Space Bar

          dude Qt was scaring the other platforms cause how fast code and apps where complied….eg. all the Qt apps that have been made of symbian aka fmobi,Ulocker,SlideLock…facinate..etc those apps where updated on a reg and was seeing the power of Qt Elop was threatened by that as well since he’s a MICROSOFT footie

          Qt helped Nokia survive with symbian,s40 and Meego

          one application would have made it to 3 platforms and RAISING MORE MONEY on the 3…elop is a damn fool for no seeing that

          • Pasanen oli hieno mies

            Tomi Ahonen was claiming how hundreds of million S40 phones can run Qt applications.

            Are you trying to say that it’s true? How did Qt help the existing installed base of S40 phones?

            What do you think, is it faster to make an application with Qt compared to making the same app for iOS?

            • GordonH

              Very Valid point and true point made by Deep Space Bar.

              • Pasanen oli hieno mies

                Yes, it’s a valid point but unfortunately it’s not true.

                That’s just a story people praising the Symbian religion want to believe.

                • Jiipee

                  How do you know its untrue. What Ive heard is that it was possible to have Qt on S40. Ofcourse not on the existingdevices, but eg in touch only Ashas. What I dont know, is the performance on S40. It seems that the touch only Ashas themselves sold the same volmes as WP as total.

                  There are now good example of great indie apps that are first developed to Harmattan and will be available on Symbian and BB10. That installed base is far bigger than WP8 and 7.

                  • Pasanen oli hieno mies

                    This was about Tomi Ahonen claiming that current installed base of S40 phones can run Qt applications. It was about existing devices, not future ones.

                    That claim is not true.

                    • Jerome Horno

                      Why this is not true? Qt is more then flexible.

                    • Trexus

                      @Jerome

                      Why even bite???
                      The guy isn’t even a competent/highly-experienced dev.
                      His opinion has almost zero weight.

                    • Pasanen oli hieno mies

                      Show me some S40 phones supporting Qt applications.

                      Yes?

                      No?

                    • Trexus

                      No.

                      That possibility was conveniently killed-off long ago.
                      Not via S40, but via other means…

          • zlutor

            +100

            And I do not just speak about it but do it in practice for S60+ phones and MeeGo – still… ;-)

            Qt – and especially QML – was/is a big idea. Fortunately Nokia sold it to Digia and there will be/is support for
            – Symbian (fading but still)
            – MeeGo (fading but still)
            – BB10 (official SDK)
            – Sailfish (official SDK)
            – Android (community port now, official coming in ’13)
            – iOS (coming in ’13)

            Yes, you see one ‘major’ OS missing: WP8… :-(

            Sad Nokia gave it up…

            • Pasanen oli hieno mies

              I see.

              - Symbian (tons of bugs)
              - MeeGo (MeeGo proper never shipped on mobile)
              - BB10 (how much unit sales or market share?)
              - Sailfish (Promiseware)
              - Android (NDK, while Dalvik applications are common)
              - iOS (Easier to use native cocoa)

              • zlutor

                yes, you can always use native SDK BUT if you can share your once developed code why bother with several native SDKs?

                Of course, there can be reasons for that but for majoity of apps – I do not think so…

                But you know I’m just a hobby developer maybe professional SW houses having hundreds of developers specialized on certain OSs think different… :-)

                • Pasanen oli hieno mies

                  Let’s say I need an iPhone app and an Android application.

                  People rarely use NDK for Android.

                  Why would I start coding with Qt if I’m starting to code today? This is the problem Nokia had. That great improvement was always happening in the future.

                  There is no guarantee that Android and iOS will support Qt/I can deploy on those platforms.

                  Besides, how can I be sure that the Qt implementations will support all the features I need?

                  • Jerome Horno

                    Owww yes, and more: how can you be sure that any of implementations of anything XYZsoftware will support all the features you need? You can have a nice future as a kind of Prince Hamlet: to code or not to code, that is a question…
                    I am truly worried of your unsupported needs.

                    • jiipee

                      ;)

                    • Pasanen oli hieno mies

                      I guess you didn’t understand.

                      It is promised that Android and iOS development can be done with Qt.

                      How can I be sure that either of those platforms will support it?

                      If I developed for one of those, I would have my app or application on only one platform. By using Qt i might end up without iOS app or Android application.

                      I want to be sure that I can publish at certain time.

                      I suppose this is not a problem for you but I see it as a risk.

          • migo

            If Qt were that awesome, how come it’s hard to find KDE apps that are better than what you can get on Windows?

      • twig

        Didn’t you say you would leave when Nokia went into the black?

  • Noki

    WTF really WTF soo nokia is paying on average 62,5$ per lumia to MIcrosoft??? if all it takes is 4 million to cover the 250M Million quarterly payout that means the licensing cost 62,5$ per terminal OMG.

    Is nokia for real, it can’t be ?????

    • ms.nokia

      so ms paid nokia $250 million to use wp,
      and then nokia paid ms $250 million to licences wp.
      net licensing cost per terminal ?

      • Noki

        its just basic math right? and its mindbogglingly expensive the price per terminal Nokia is paying.

        • Jiipee

          that is only due because they overestimated their future sales (and made horrible deal with MS). That is also why they had to write down also Lumia stocks and probably why they have been channel stuffing (minimum order quantities of L800 from Compal).

          • Noki

            yeah seams like thats the case.

          • incognito

            Nokia did a bad prediction on their own performance? You don’t say! :D

            If their over-enthusiastic stance on the WP strategy turned to be a completely overestimated prediction, what should we say about their at least 150M more Symbian-based devices during the transition period (2 years). Well, I guess they still have a couple of weeks to sell 80+M Symbians to prove their powers of prediction :D

            • zlutor

              “what should we say about their at least 150M more Symbian-based devices during the transition period (2 years).”

              Ask Elop about it! That could have been more or less achieved without his famous memo…

              Nokia has nothing to offer in mid-range of smartphones without Symbian nowadays… :-(

              not to mention Symbian was quite well received in emerging markets, still…

              • Pasanen oli hieno mies

                And Nokia would be selling next to nothing it it continued to sell Symbian phones.

                You see, Symbian was destined to collapse.

                http://en.wikipedia.org/wiki/File:World-Wide-Smartphone-Market-Share.png

                Feb 2011 did not crash Symbian sales. Symbian was crashing long before that.

                • zlutor

                  Symbian sales were declining – in terms of market share – and increasing – in unit wise – before Elop leaked that memo…
                  If you declare your product POS naturally nobody wants to buy it.

                  I do not want to say choosing WP alone was wrong but choosing WP exclusively (without having a single unit to sell for months) AND declaring you actual and only products POS/DOA does not seem to be wise strategy for me…

                  Without saying anything but pushing Symbian phones AND working on MeeGo/Wp/Android phones and announcing them when they are available in mass must have been more economical…

                  With that strategy quite big portion of 150mio devices could have been sold. Definitely more than sold actually…

                  BTW. Could you show me WP on that diagram? :-)

                  What about an other picture? :-)
                  http://communities-dominate.blogs.com/.a/6a00e0097e337c8833017c3636bfac970b-800wi

                  • Pasanen oli hieno mies

                    While WP is not succeeding, it doesn’t prove Nokia had any guaranteed way out of the misery caused by the collapse of Symbian.

                  • jiipee

                    You shouldnt touch those comments. He’s copypasting the same fragment without any reason to think himself. That is something he learned from Tomi Ahonen and then reversed it.

                    • Pasanen oli hieno mies

                      Actually not quite. And that’s not copy paste.

                      You could look at something else here in MNB.

                      Yes?

                • rustyknight17

                  true , Symbian had issues before 2/2011 .
                  But , u r wrong , Symbian was growing in 2010 , but at a slower rate than the late , so yes it was growing in sales but losing market share .
                  Technically , ur right , 2/11 didn`t crash , rumours of the Nokia.MS alliance and rumours of the upcoming burning platform memo did sharply increase the decline . I know , I was there , in the market for a new device and the N8 was a top contender . These rumours were so prevalent that they were widely regarded as true . So while Elop didn`t create Symbian`s troubles , he did make a bad situation MUCH worse ! For that alone , he and the board need to fired immediately !

  • BellGo

    Yet another honest reason not to base your entire bloody smartphone business on one UNPOPULAR OS.

    And around 60$ per licence, eh? Nice, nice..

    • Noki

      This is plain lunacy… OMG I thought it was like 10-20$ this makes it completely unpredictable in the mid range price area.

      • ms.nokia

        thank goodness for asha

        • Noki

          But thats only for sub 100$ what about 200$ and 300$ that price is per licence is plain crazy, are they nuts????? And that pops the question how much is Nokia losing on the cheep Lumias??? It is impossible they are turning a profit on them…

          No this is sooo crazy it can be right…Honest, something is wrong here.

          • ms.nokia

            that is the domain of wp7.xx

            • Noki

              ok if that the domain of wp7.xx and believing the myth that MS is discounting the licence for wp7, what is the split ??? 70$/50$, 80$/40$, 90$/30$ more less? how ever you turn the numbers around its still freaking expensive.

              • ms.nokia

                nobody knows the full cross licensing deals worked out between ms and nokia.
                but its fun to negatively speculate right?

                • Noki

                  Dude, I’m not having fun here, this article must be wrong its by several degrees wrong, it makes no sense, no mater how you look at it. If this was in the slightest way true than the entire Lumia thing is completely crazy, and Lumia would only make sense in the iPhone price range. 450$ up price and not discounting phones after a few months in the market.

                  • Pasanen oli hieno mies

                    It may be a flawed article but it will be interesting to see if Tomi Ahonen is going to use it as a hard fact.

                    You know, Tomi Ahonen just loves to spread disinformation if he can use it for blaming Elop for everything.

                    This great web page explains how much Tomi Ahonen lies. You should check it out.

                    http://dominiescommunicate.wordpress.com/

                    • Deep Space Bar
                    • Pasanen oli hieno mies

                      Yes, that first image has some nice fabricated data.

                      In reality Symbian was collapsing and very few real experts thought Nokia was going to get more market share.

                      Tomi Ahonen makes lots of fabricated charts. He does this probably because he makes his living out of horror stories and tales about the alternate future that could have been. In a way he is a storyteller and he makes up fancy fantasies for adults.

                      There is nothing wrong about reading his fabricated stories but please don’t think they tell the truth. They are just stories.

                    • yasu

                      Pasanen oli hieno mies says:

                      Yes, that first image has some nice fabricated data.

                      In reality Symbian was collapsing and very few real experts thought Nokia was going to get more market share.

                      You’re talking about this image? http://communities-dominate.blogs.com/.a/6a00e0097e337c8833017c3636bfac970b-pi

                      Apparently, you also have reading comprehension problems.

                      The image said : Nokia Smartphone Sales Before & After Elop Effect in Millions of Smartphones.

                      You must derive a weird perverse pleasure of broadcasting your confusion about the concepts of sales and market share.

                      There is nothing wrong about reading his fabricated stories but please don’t think they tell the truth. They are just stories.

                      If only you could follow your own advice.

                    • Pasanen oli hieno mies

                      I see. You don’t understand. I’ll explain this.

                      Tomi made a chart with unit sales.

                      I was talking about how very few real experts expected Nokia to gain market share.

                      That kind of growth in unit sales would have required Nokia to get more market share because market was not growing fast enough for it to be possible without getting more market share.

                      Yes?

                    • yasu

                      Pasanen oli hieno mies says:

                      I see. You don’t understand. I’ll explain this.

                      Tomi made a chart with unit sales.

                      I was talking about how very few real experts expected Nokia to gain market share.

                      You said that it had fabricated data and talked about market share. This is a sales chart.

                      That kind of growth in unit sales would have required Nokia to get more market share because market was not growing fast enough for it to be possible without getting more market share.

                      Why? Walk me through the math of it.

                      Yes?

                      No. I’m waiting for your explanation, complete with the math behind it as there’s no mystical link between market share and sales.

                    • Pasanen oli hieno mies

                      It is possible that you are unable to understand unit sales and market share.

                      Yes?

                    • Noki

                      yasu its pointless talking to this guy he is bonkers…notice as he does not talk with you but keeps repeating the same narrative over and over again and ends up discussing with himself over straw man arguments..
                      Most of the times he ends up looking crazy saying one thing and its opposite in the same sentence, to conclude that you must be nuts for saying what he just did.
                      Its has entertaining value, but that’s it.

                      OO and now he likes to terminate everything in Gordon Ramsay style finishing every sentence with “Yes?”

                    • Pasanen oli hieno mies

                      Noki. You really seem to know your Gordon Ramsay. I don’t care about his way of communications so much, but you really seem to like him. Yes?

                      It seems that you just don’t understand how the world is not black and while. That’s why you may be confused while not understanding the actual message.

                      I may say that I like the 808 but I wouldn’t like to use it as a phone. This may appear strange if you don’t understand why I may like it.

                      You see, I explain this for you. You may understand. It’s usually not very useful to explain something for someone who can’t understand. That’s why I don’t bother all the time.

                      The world is not black and white and all this has a purpose, you know?

                      Well. Purpose. Yes.

                • jiipee

                  If there are others who are participating in Nokia annual meeting, you should try to ask this. I will. Most of the questions/comments there are plain idiotic (why does not the annual report have pictures of the board etc.) and there is room for proper ones.

            • zlutor

              NO. WP7.x is not capable of competing there.

              No BT support, no SD support, nothing for many ‘mandatory’ features there…

  • JGrove303

    So to be straight, to know I’ve got this right, am I to understand that Microsoft is no longer paying Nokia for their partnership or IPs? Thus, instead of breaking even on licencing cost back and forth, Nokia is now losing about half of the profit to licensing WP?

    If so, that is quite troubling. However, one must think of what it cost to develop, maintain and expand a proprietary OS. It must be more expensive for a company that doesn’t live off advert revenue.

    • Noki

      Given how pathetically small WP is I was expecting Microsoft to be practically giving away licences… This is crazy.

      • http://mynokiablog.com Jay Montano

        True. I think Nokia and MS have co-authored the book of fail, and what both must do to ensure that despite their strengths to cause them great success, they’ll still fail.

        • Deep Space Bar

          and you trust them with all your heart jay…. like i SAID I DON’T TRUST MICROSOFT..i’ve also posted numerous articles and links about how 2 face microsoft is and you still haven’t and didn’t believe me till this crap…can i get my apology now….and thanks…for not listening to someone that has sense

        • http://thegadgetfreak.net Ajit

          Now you say this…. you called me a Troll …etc and etc…

          Now you understand what I have been saying all along!

          Microsoft is pure evil…. Elop and Microsoft will ensure Nokia is squeezed till every last penny is extracted from it.

      • Noki

        just imagine the strategy would have worked out as plan and Nokia was selling 35 Million Lumias now would that mean nokia would be paying over 2 BILLION $ to microsoft? PER quarter? WTF naaaaaa can’t be.

        • http://mynokiablog.com Jay Montano

          There must be some sort of misunderstanding somewhere as these figures really aren’t making sense.

          • Noki

            yeah… this would be nuts. Nuts to the point that it makes absolutely no sense.

          • kues

            Nokia is paying a minimum in licence fees regardless how few Windowsphones they sell.

            • Noki

              hufff….. that makes sense.

              Do you have a link to that info?

              If you do I would suggest a major edit to this article…

              • kues

                Reread Nokia’s statements about the platform support payments- i myself didn’t understand it right until recently.

              • nn

                The formulation in the results suggests so:

                To date the amount of platform support payments received by Nokia has exceeded the amount of minimum royalty commitment payments to Microsoft. Thus for the remainder of the life of the agreement the total amount of the minimum software royalty commitment payments are expected to exceed the total amount of the platform support payments. In accordance with the terms of the agreement, the platform support payments and annual minimum software royalty commitment payments continue for a corresponding period of time.

                As I read it they are halfway thorough the agreement and now they have to start giving money to MS regardless of how many licenses they actually use, so at the end it will be zero at worst (from MS point of view).

                • Viipottaja

                  Apparently not quite, Nokia should be a (slight) net receiver in the worst case scenario:

                  “Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments.”

                  • nn

                    True. Now what happens if Nokia wasn’t just “slight” net receiver to date? What if so far they weren’t paying back that much? Then they would be in minus, possibly in big minus.

                    But in the end this detail doesn’t matter. As was pointed out many times before, the big problem is that the “payments slightly exceeding minimum licenses” itself is laughable. The $1 billion per year was always ludicrous and given how much resources is Nokia throwing at WP and in how big hole would WP be without them, it’s travesty they should ever pay any money back to MS, regardless how many licenses they use.

                    • Viipottaja

                      No, the total amount over the life of the contract is a net receivable for Nokia. Individual quarters “don’t matter”. Let’s for arguments sake say 5 years (we don’t know how long the contract is, AFAIK :) ) Nokia would receive US$5billion and its minimum license fees would be slightly less than that.

                    • nn

                      Yes, we repeated that several times here. And?

                      You are somehow forgetting that what Nokia will get for these < $5G is licenses for WP. Actually hundredths of millions licenses and there is no way they will be able to use them. As is obvious now the "minimum" is actually unreachable maximum. And what is worse, the licenses are in reality worthless – WP is unsellable and nobody sane would buy 300M licenses for $5G.

                      The whole deal is about Nokia giving MS things like know-how, maps, marketing, access to carriers, sales and manufacturing channel, and what they get in return is nothing more than cut in license fees, which themselves are worth approximately nothing.

                    • Viipottaja

                      Sorry I still don’t quite follow – what is the problem? Nokia is getting more money in than they have to pay out, even if the strategy fails (and yes, I know, you think it has already :P ). So they licences are free (and in fact MS is paying Nokia for them slightly).

                      I did not sleep well last night so I might even slower than usual. :D

                    • nn

                      No worry, I’m used to talking to WP fans!

                      First, you should understand that Nokia actually won’t receive money from MS. The deal is about Nokia giving MS know-how, marketing and all that platform support, and in return MS gives them licenses. These dollar sums are just accounting. Over five years there will be $5B from MS in Nokia’s books, while in MS books there will be at minimum slightly less than $5B received from Nokia.

                      The problem is the deal essentially claims this Nokia support is of the same value as MS licenses. Which it certainly isn’t.

                      Start with the Nokia support part. You think Apple is going to give up iOS, switch to WP and pour all their resources into MS ecosystem for mere $1B per year? Or that Google and Samsung will do the same with Android? It’s of course laughable. I would argue creating viable smartphone ecosystem is actually incalculable, given that smartphones are the future of IT and computing. But still, what Elop did is to kill own ecosystem and promise MS to create another one for $1B per year.

                      And for the value of MS licenses – yes, Nokia will get lot’s of license, but as WP is floating around the ~ 2 % market share, the licenses are practically worthless. On top of that Elop apparently committed Nokia to buying so much of them, that they won’t have use for them anyway.

                    • Viipottaja

                      Luckily you Meego fans are there to explain and help us understand it all!

                      Still, and I hope you will patiently illuminate me again: 1) how do you know the $250/quarter is and will remain the only monetary flow from MS to Nokia Corp? and if you don’t know, why do you assume and say so? 2) are the effectively free (or a bit better even) licenses really worthless when they just generated sales of 4.4 million units at a pretty decent and increasing ASP and revenue?

                      And alas, unfortunately Nokia is no Apple or even Sammy and was not back in 2011 either. Comparing Apples to Nokias does not really work.

                    • nn

                      Yep. The Symbian/Qt/MeeGo fas are again saving the day. Always were and always will.

                      1) Unless you can show me that these phantom deals are wildly unfair to MS to the point they cancel out this platform support deal, we can just assume the net difference in value is zero and thus the deals don’t change the fact that Elop and MS shafted Nokia.

                      2) Big jump in revenues happened in 2011 and in 2010, so I’m interested how you plan to show this time it’s because of WP and not, for example, simply due to Christmas. If anything it’s clear WP is toxic, instantly making your good phone unsellable. If they would put anything else on 920, it would sell way more.

                      Back at the end of 2010/start of 2011 Nokia was actually bigger than Apple or Sammy. Also, the walled garden approach of Apple seems to be flat-lining, few quarters of market share decline and I expect WP fans will be in full force arguing the end is night and Apple should immediately follow Nokia’s lead.

                    • Viipottaja

                      1) I have no idea what you are talking about. Why would the other monetary flows need to be wildly unfair to MS? Nokia is getting lots of WP licenses (according to you more than they could ever use) for better than free for 5 years.

                      2) Focus – no need to go back to 2010. The strategy has been made and Symbian and Meego are NOT coming back no matter how many times you talk about counterfactual scenarios of what would/could/should have happened. I asked you: are the revenue and sales the better than free WP licenses generated to Nokia in Q4 (something around US$1 billion taking the ASP) worthless?

              • Viipottaja

                Yes, my reading is that they have to make a payment even if they would sell zeron WP phones. HOWEVER AND BUT over the life of the agreement they will be a NET receiver (see Nokia’s actual statement on this below). Only if they sell more than the minimum commitment level, they become a net payer over the life of the contract.

                • kues

                  The amount of 250 million $ per quarter platform support payments stays the same over the lifetime of the agreement.
                  “Under the terms of the agreement governing the platform support payments, the amount of each quarterly platform support payment is USD 250 million”

                  The “annual minimum software royalty commitments” must increase over time- reflecting the planned transition from Symbian to WP.

                  My guess would be:
                  10$ licence fee per WP
                  2011: no minimum commitment
                  2012: 60 million WP -> 600 million $
                  2013: 100 million WP -> 1 billion $
                  2014: 120 million WP -> 1,2 billion $
                  2015: 140 million WP -> 1,4 billion $

                  Would make up to 4,2 billion payed to Microsoft and 4,25 billion received from Microsoft.

            • http://mynokiablog.com Jay Montano

              This makes much more sense. Flat rate. Up to Nokia to sell as many as they can (well, if they can be bothered to make any anyway).

              • Pasanen oli hieno mies

                Yes, this is what I have been trying to say.

                Microsoft has been selling flat rate licenses for years. This is one reason why this deal was so interesting for Nokia.

                • Jiipee

                  It is not flat rate. If they sell more than than the value to reach minimum license fee, Nokia has to pay more.

              • Noki

                Still if the “flat rate” that would very nontraditional of Microsoft to offer btw. is 250 M its still pretty expensive more than symbian was expensive.

                I Belive it must be more of a minimum fee Nokia as to pay no mater what, on top of what ever price they negotiated per device, and thats what the article is seeing.. so the 250M per quarter is still far from depletion its just that we are looking at some payment Nokia did and thinking it must have depleted the 250 M

              • nn

                And that flat rate thing is coming from where, exactly? I don’t see how you that could fit into the formulations.

                I think it’s clear they expected they will be selling not 4M WP phones, but 40M phones by this time, and committed to some minimal number of licenses. Then it turned out the number isn’t so minimal…

              • kues

                No flatrate, more like a subscription fee covering up to x million WP licences per year/quarter. If Nokia would sell more than x million WP they would have to pay additional licence fees.

                • Noki

                  yes thats my understatement as well, then I got confused by the Slightly part given that the contract would be almost over would men that it would be close to start paying if not already paying for it… and that would meen x would be very low…
                  But the contract is for 5 years so okia might be predicting substantially larger sales of Lumias in the future that might reach that X and balance the contract into “slightly” profitable area, wile it should be highly profitable thus far…

          • http://aligonemobile.blogspot.com/ Aliqudsi

            Definitely something wrong seeing how this would mean the price of WP8 license and office is almost the same as the price of Windows RT:

            ” $80 to $100 USD for using both Windows 8 Pro and Office 2013. For devices packing an ARM-based chip, OEMs will be required to pay between $50 and $65 USD for using Windows RT and Office 13 on each device.”

            I recall hearing the number $30 per license on WP7 before not sure where. But keep in mind the WP7 license included paying for Bing maps as well which is now the opposite, where Nokia gets payed for their maps. I always imagined it to be ~$10-15 for WP7 and ~25$ for WP8.

            • Noki

              Yeah that would be more normal numbers, its still very expensive specially if it becomes successful much more than symbian but more sane an on where near enough to deplete the 250M per quarter payments.

            • http://twitter.com/haranguemnb Harangue

              From the info available it is $15 to $25. There have been some words from MS themselves that, that is correct (don’t know where I read it though) and it was also mentioned by Huawei I believe or LG.

              There is at least enough talk about it being around 15 to $20 per phone sold.

            • migo

              Are there numbers on what Nokia is making for providing Maps for WP8? That should be factored in to whether they’re making money off the deal or losing it.

        • Pasanen oli hieno mies

          Well.

          I’ll give you some free education on this matter.

          Has it ever occurred to you that there may be other kind of deals in addition to paying a fixed amount of money for one license?

          Yes?

          • Noki

            an you call Symbian a religion???, talking about faith…. Say it as it is.
            This price is crazy and its probably wrong and miss understood.

  • nn

    This effectively had given Nokia an edge over all other WP OEMs seeing how for the past year they were operating at an almost no cost expense to use Windows Phone; or in fact were making money by using the platform.

    You don’t know that. Frankly, I’m sure that when marketing kickbacks and all other gimmicks are taken together, Samsung, Huawei or HTC are at worst paying zero dolars for the WP endeavour. Otherwise there is no point for them to continue with WP, it’s only Nokia who signed the agreement to use WP exclusively and extinguished all alternatives, ending up with MS as their only option.

    • Noki

      It’s worse if the article would make any sense the worse think it could happen is nokia selling alot of Lumias. Simple math would tell you that had it been successful the strategy Nokia would be paying Microsoft over 2 Billion to Microsoft per quarter. enough to pay 100.000 developers every month.

  • Viipottaja

    It would be useful to read what Nokia actually said:

    “Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments. To date the amount of platform support payments received by Nokia has exceeded the amount of minimum royalty commitment payments to Microsoft. Thus for the remainder of the life of the agreement the total amount of the minimum software royalty commitment payments are expected to exceed the total amount of the platform support payments.

    We are talking about the life of the agreement, not this particular quarter (unless the details of the Q4 report show that the licensing fees already exceeded the platform support payment).

    So, at the _minimum commitment levels_ they would _over the life_ of the agreement _receive more than pay_. To date (which would imply Q4 as well) they have been a net receiver.So it goes to reason that in the remaining contract period they will need to pay more than they receive. And obviously, if (and only if) they sell more than the minimum levels(and thus need to license more) they will become a net payer.

    • nn

      And obviously, if (and only if) they sell more than the minimum levels(and thus need to license more) they will become a net payer.

      But that holds only over the whole time of the agreement and this smallest possible net should be only “slight”. Therefore, unless they are already sending most of the $250M back to MS, sooner or later they have to start paying to MS more than they receive, regardless of how much phones they sell.

      • Viipottaja

        Yes, for the remaining life of the contract, just like they also clearly said. :) [There may still, in principle, be individual quarters in which Nokia is a net receiver, but hopefully not.]

        • nn

          Well, then we are back at the start. They are paying $250M (plus minus something) for what – 5 million WP licenses?

          • Viipottaja

            I don’t know what the minimum license payments are and am not sure how you could calculate that based on the information we have. We seem to know from what Nokia said (“to date”) that support payment was still a net flow to Nokia in Q4. How big a net flow, we simply don’t know and its somewhat useless to speculate, IMO.

            • nn

              Yes we know that. Although not precisely, we still know the minimum license payments will be slightly less than these quarterly $250M. Let’s say it’s $200M per quarter ($4B over five years), that surely is more than slightly less.

              Then either they are already forking these $200M for 4M license. Or so far they were paying just for the licenses they actually used, which means they were essentially running up debt of future license purchases they had to make, with the hoping there will be sudden nuclear explosion in WP sales. That’s the only case it can sort of work out for Nokia, and also it’s something that isn’t going to happen.

              • Viipottaja

                Luckily, like you stated yourself above, these are just accounting numbers and there is in fact a small (luckily for Nokia) net payment from MS to Nokia over the contract period. Unless of course, Nokia is very successful with WP sales and has to pay for the licenses that are over and above the minimum payment (which according to your calculations and comments above already gives them far more licenses they could ever hope to use).

    • Noki

      Actually I find it confusing and the wording is not very god…soo
      “To date the amount of platform support payments received by Nokia has exceeded the amount of minimum royalty commitment payments to Microsoft”

      No surprise there as the volume is soo low right? handing it up for all the quarters makes no difference its should have been positive in every single quarter right?

      And then they say “Thus for the remainder of the life of the agreement the total amount of the minimum software royalty commitment payments are expected to exceed the total amount of the platform support payments”

      aka the money we received so far and that we piled up on this agreement should be enough to keep the agreement profitable overall… and this suggest that indeed they have started to pay Microsoft on a quarterly basis even dough globally its still profitable, and will be for the remaining part of the agreement. (2 more quarters right?)

      The conclusion would automatically be that indeed it only takes 4.4 Million Terminals devices to deplete the 250M freebies

      • Viipottaja

        I am not sure I quite follow what you mean. Yes, to date it has been positive every quarter (and presumably including Q4 given the “to date”).

        In any case, how do you know the contract is ending mid-2013?

        • Noki

          hee wasn’t the contract for overal 2 Billion aka 2 year’s??? They might extend it but thats another story. And makes another compelling argument for Nokia selling as few Lumias as it possibly can.

          • nn

            The contract is for five years.

            • Noki

              Are you sure? Might be mistaken but thought it was 2 years..5 years is an eternity in the mobile space.

              • nn

                For example here. Two years is too short, it would mean the deal ends this or next quarter, which it certainly isn’t as is evident even from the formulations around platform payments.

                • Noki

                  you are correct

  • yasu

    Nokia said:
    http://www.results.nokia.com/results/Nokia_results2012Q4e.pdf

    (…)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.
    Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed
    the total amount of the minimum software royalty commitment payments
    . To date the amount of platform
    support payments received by Nokia has exceeded the amount of minimum royalty commitment payments to Microsoft. Thus for the remainder of the life of the agreement the total amount of the minimum software royalty commitment payments are expected to exceed the total amount of the platform support payments.(…)

    Nokia is talking about expectations, about selling slightly more than $250 million worth of WP licences, in an unspecified future.

    • Noki

      Ok guys this part is scary
      “Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments.”

      SLIGHTLY how can it be SLIGHTLY??? on average nokia as been selling 2.5 Milion Lumias per quarter lets say by some miracle its reaches the average of 5 per quarter Million at the end of the deal this would imply that the licence would be something like 50$ per Lumia, aka crazy expensive and completely unpredictable for sub 300$ devices…

      • Noki

        Ok I got the period wrong its 5 years, so Nokia can expect much larger sales in the future no problem, and still think the overall the licence fees will be overall positive….for the full extent of the deal…

        • nn

          Hardly. If the deal is for five billions and the license is, say, $15 a pop, then they have about 300M WP licenses. So far they sold 15M. I don’t see how they ever could sell that much Lumias. It’s literally impossible.

          • Noki

            the question is the $x a pop right imagine its more like 30$ now aka seling 166M over the 5 years with 3 years to go 150M aka 12.5M per quarter on average, not impossible…. Pathetic IMO but that’s me

            • nn

              As the rumour goes, others are paying around $25 a pop. So if Elop got anything over $20 from his special partnership, he would still be idiot, now only for slightly different reason.

              • Noki

                If its 20$ then nokia needs to sell 250M over the 5 years aka 235 in the next 3 years aka approx 20 million Lumias per quarter on average, hummmmmm wishful thinking IMO

  • spacemodel

    From unwiredview.com

    When Nokia ditched its own mobile platforms and went full Windows Phone, Microsoft threw in several billion dollars delivered in quarterly installments of $250 million, over several years, as “platform support payments”.

    Since the first Lumia launch in Q4 2011, Microsoft has already paid Nokia $1 billion in platform support payments. Which was great and helped Nokia to balance its books during the tumultuous transition period. But those good times are at the end now. While Nokia will still be receiving platform support payments during 2013 or longer, each quarter it will be paying Microsoft even more in “minimum software royalty commitments”.

    Nokia will have to pay these minimum royalty fees whether it shifts enough Lumia phones or not. And, until the volumes of Lumia units grow well beyond where they are now, the royalty commitments will add up to a pretty significant amount per device shipped.

    We already know that Microsoft is paying Nokia $250 million per quarter. And now Nokia tells us that every three moths it will be paying Microsoft $250 million or more in Windows Phone license fees. Nokia shipped 4.4 Lumias in Q4 2012. Lets be generous and say they will ship 6 million Windows Phones this quarter. Which means that in Q1 Nokia will be paying Microsoft at least $41 for every Lumia device shipped. Even at 10 million per quarter, the license fee will be $25 per device.

    I’m not sure what kind of royalty payments Microsoft is demanding from others, but in order to stay competitive, Nokia better ramp up its Lumia volumes real fast.

    • Noki

      That is a very weird business model specially for Microsoft, that would be a flat rate.

      • Pasanen oli hieno mies

        Why would it be weird for Microsoft?

        If it was the only way they could get Nokia to use WP, that makes perfect sense.

        If the deal was made to last for 5 years, it could end up with Nokia selling lots of phones and Microsoft having a nice market share in mobile. If they succeeded.

        Without that kind of a deal Microsoft would have ended up with a considerably smaller market share.

        • Noki

          hey you that constantly say that symbian was to expensive, did it cost more than 250_M per quarter? What about meego and meltemi???

          “The agreement also has Microsoft paying Nokia for the right to use its patent portfolio, one of the people said.”

          how much is the patent portfolio worth per quarter???

          • Deep Space Bar

            symbian,meego and s40 i bet are a hell of alot cheaper then WP in general

            • Noki

              Depends on how much you value your Independence and Ip portfolio.

              So far it should be profitable for nokia to use wp and nokia still has plenty of Lumias to sell before it actualy start to pay Microsoft for the right to use them…

              • Jiipee

                The IP part you mentioned is in fact crucial. Nokia themselves stated in thei 20F report as one of the risks that they will not have thei own core os developent and thus they wont be growing their patent portfolio there. Ie no additional income. Whether the values would be significant, I dont know.

          • Pasanen oli hieno mies

            Apparently it cost more. Just check how much less expenses they have now compared to the past. It seems that MeeGo and Meltemi had possibly team(s) of several thousand people. That’s not as many as there used to be for Symbian.

            You should also remember that 250M is not the final number because Nokia receives something from Microsoft.

            At one point it was claimed that Nokia could make income of $125 million in a quarter from the patents. That’s probably less that they could get if they really wanted to.

            • Oleg Derevenetz

              But Nokia currently sells much less devices than in the past. Just curious, how many these license fees would be if (miraculously) Nokia was selling ~30M smartphone units per quarter, like it was two years ago?

              • Noki

                if it is like some say 20$ per terminal then it would be something like 600M discounting the temporary 250M over 350 M aka way more than symbian/meego/meltemi ever costed.

                • Oleg Derevenetz

                  Yeah. $350M per quarter is $1.4B per year. If Nokia even pay each developer, say, $140k per year, they still can hire 10000 (ten thousands) developers to develop, say, Harmattan. If I remember correctly, while moving Symbian development to Accenture, Nokia fired just about 4000 developers, and they hardly earned $140k per person. It looks like this “enormous costs of OS development” is just a myth in comparison with WP fees. While you sell just a few millions of WP devices per quarter, expenses are low, but if you want to sell really many devices, your own OS development seems to be a lot cheaper than using WP. Another argument in favor of idea that choosing WP was a huge mistake (if not sabotage).

                  • RIM

                    And you are discounting the quarterly 250 million from Microsoft. Só its more much more than that…..

                  • rustyknight17

                    I`d say ur right Oleg , looks like Nokia should have stuck to their guns! Something that lends credibility to this is Jolla Mobile . They r a small company , yet they managed to develop Meego`s successor without huge investment like Nokia did …

                  • MF

                    The cost of an employee is far more than just payroll, it includes also fringe benefits and other support costs. Another issue is that Nokia/Symbian was ill-equipped to compete with iOS and Android and may have required major overhaul anyway. Whatever the Symbian fans may say about how good the platform is, it clearly wasn’t reflected in the end user experience which is very far from satisfactory.

                    • rustyknight17

                      What`s ur point ? the cost of an employee is pretty much the same for all companies …
                      As for symbian vs iOS and Android , that depends on which version u r referring to . s60 , sure S3 and Anna yes aswell , but , as Nokia told us several times , S3 and Anna were catch up . Belle , must disagree , it`s every bit the equal of any OS out there at present , though that won`t be true much longer . And it`s not just me saying that , even Engadget and Phone Arena , known for their antiSymbian bias , agree!
                      As for satisfactory , depends on what u want .

                    • Oleg Derevenetz

                      1. As you can see, I said Harmattan, not Symbian.
                      2. Even if support costs are the same $140k per year per person, Nokia still can hire 5000 developers, which is more than they fired to “cut costs” while moving from Symbian and far more than count of developers that busy developing Harmattan or Meltemi.
                      3. We even do not take into account that these developers are busy improving company patent portfolio at the same time, which brings additional money, or that we discounted additional $250M per quarter that is currently compensated by MS, so in fact WP cost was $600M per quarter according to our calculations, which should be more than enough to compensate all these additional support costs even for the same ten thousand developers.

                    • MF

                      I think Harmattan might have succeeded, but Nokia had failed so badly with Symbian that I’m doubtful whether they have what it takes to build a proper OS in-house. If you can’t even make a proper keyboard or browser or social app, or at least have a smooth and stable system then no matter how sophisticated the system is its not going to help. So yes, I stand by my statement that Symbian is not competitive, even Belle. I am typing this from my 808 by the way, and it is very laborious task even with Opera. Of course the N9 is a lot better but the reason it was canned will be a great mystery although I think there were problems there as well

                  • GordonH

                    Oleg nailed some serious business maths here. Well written comment.

                    • Pasanen oli hieno mies

                      Yes, nice math but unfortunately wrong numbers.

                    • Oleg Derevenetz

                      @Pasanen oli hieno mies:

                      So what numbers are “right” in your opinion? $10 license fee per device? $5 per device? Any other? nn gave a link to this article:

                      http://www.phonearena.com/news/ZTE-exec-reveals-how-much-the-company-pays-Microsoft-for-each-Windows-Phone-license_id26047

                      where it is stated that fee is $23-$30 per device, but let’s suppose that for Nokia price is cheaper, around $20. I asked you about your opinion above, but it seems that you can’t say anything about this, except that “numbers are wrong”. WP religion? Yes? :)

                    • Pasanen oli hieno mies

                      Do you think developer salaries are the only expense Nokia had when developing Symbian?

                      I don’t even like WP that much so I guess, no.

                      Yes?

                    • Oleg Derevenetz

                      @Pasanen oli hieno mies:

                      Was already discussed in answer to MF above. Yes?

                    • Pasanen oli hieno mies

                      And you need only developers for developing?

                      No?

                      I guess it’s quite easy to make people do some tasks if you just show some example. They will do it without even knowing that they were tricked to do it?

                      Yes?

                    • Oleg Derevenetz

                      @Pasanen oli hieno mies:

                      Are you developer? Any experience in developing something complex? BTW, my primary occupation is development of control systems for industrial equipment, not mobile apps (this is in fact a hobby). In my organization, only top managers are not developers, and all other software development-related managers are in fact developers. If you think that developers need tons of Elops to know what to do, you are wrong. While common strategy may be developed by people like Elop, there is no need to have more than a few people of such kind. There may be, of course, some organizations crowded by useless people, may be Nokia was like this, but even in this case there is no need to nuke everything like Elop did – a some gradual reorganization should be enough, and first candidates for dismissal should be all these useless “managers”, but Elop acted strictly contrary.

                    • Pasanen oli hieno mies

                      Yes, I see what you are trying to say.

                      Nokia had tons of managers.

                      I suppose you have not worked on a huge organization. In addition there has to be managers, designers (not software), HR people and all kind of people. It’s juts not about having a bunch of people to code. And yes, you need most of those people.

                      Tons of developers and only a few people to manage them may result with a chaos.

                      Elop didn’t clean the organisation, but on the other hand why blaming him when it wasn’t Elop who built that organization?

                      Besides, cleaning up a bloated corporation is hard. Extremely hard. Elop would be a wizard if he managed to do that in just a few years. Usually it can’t be done in that time because it’s impossible to get correct information for cleaning the company. Everyone will tell you how important they are and evaluating can’t be done that swiftly.

                      Just blame Elop for the organization OPK had.

                      Yes?

                    • Oleg Derevenetz

                      @Pasanen oli hieno mies:

                      In fact, I’m not saying that Nokia really need all those 10k developers, I’m only saying that Nokia could hire such amount of people (if you prefer, 10k of not only developers, but also managers, designers, HR people, and so on), and still it would be cheaper than royalties for WP, if we take that Nokia would sell the same amount of smartphones like two years ago. But I suppose that licking of Harmattan to shine required much less people, if only they was properly used.

                      And BTW I worked in huge organization as well (more than 10k people) for 8 years, but that was telecom, and I was a senior network engineer (some kind of manager too, BTW), not developer. That organisation had a bunch of managers, and I should say that not all of them was equally useful. But that’s another long story.

                    • Pasanen oli hieno mies

                      Are you sure 10 000 was enough for developing Symbian? Those 4000 they kicked out were just a part of the story.

                      Nokia had no talent for managing the development. That’s why they were not in a position to work with less people.

                      Cheaper if they sold as many smartphones as they were selling? You forget that they are not selling and it was not possible to sell that many because Symbian was destined to collapse and MeeGo was replacing something that did not really exist. High End Symbian sales.

                      How do you think Nokia was going to replace high end Symbian sales if they had only very little of those? MeeGo was supposed to be high end. Not low end like most Symbian phones.

                      Nokia was destined to fail. That’s why they had to surrender.

                    • Oleg Derevenetz

                      @Pasanen oli hieno mies:

                      I’m not talking about Symbian now, but as I remember that about 4k people was moved to Accenture when further Symbian development was moved here.

                      Regarding Harmattan:

                      1. Absence of “true Symbian flagships” (you know, with large screens, multicore CPUs, and so on) was solely due to Symbian limitations. As shown by example of iPhone or Samsung Galaxy SII/SIII true flagships are always demanded by the market, so there is no reason why Harmattan flagships would not work. In fact, Nokia now tries to bet on Lumia flagships as well (900, then 920, then upcoming EOS), but that doesn’t work – not because of bet on flagships itself, but because of WP.

                      2. You forget that there was also Meltemi, a “lightweight Harmattan” that shared codebase with Harmattan but destined for cheap segment. Together they should be sold even better than those 30M because of the wider segment (it should include current Asha segment as well). WP still isn’t able to replace ancient S40, which in fact currently Asha is.

                      The only reason why this doesn’t happen is Elop’s stupidity, and not all those “enormous development costs” as you are saying.

                    • Pasanen oli hieno mies

                      Nokia moved lots of people to Accenture but they had already kicked out many developers and they were keeping tons of developers for MeeGo and Meltemi. And they were keeping Symbian developers who started to work on WP.

                      So, 10 000 may not be enough. Yes, it may be, but then again it may not be enough.

                      Harmattan flagship. They should have sold those for Android and iOS users because there just were not too many high end Symbian users. Competing with Harmattan against iOS and Android? Not a smart idea because Harmattan was basicly a one trick pony with incomplete features (look about the lies about not adding folders).

                      Meltemi would have been ready by the end of 2012 if we were lucky. If not, who know how much time it would have taken.

                      30 million of combined sales from Harmattan and Meltemi is extremely bold claim. It could have been only 10 million or even less.

                      Elop saved Nokia by ending those horrible costs Nokia’s OS development was creating.

                      You should be thankful.

                      Yes?

                    • Oleg Derevenetz

                      @Pasanen oli hieno mies:

                      “30 million of combined sales from Harmattan and Meltemi is extremely bold claim. It could have been only 10 million or even less.”

                      Well, this is in fact speculations. Current Asha sales itself was about 9M in Q4, and that’s for ancient S40 devices almost without apps.

                      “Elop saved Nokia by ending those horrible costs Nokia’s OS development was creating. You should be thankful. Yes?”

                      Yeah, and by ending sales as well. With WP, expenses for large sales are bigger than those “horrible costs Nokia’s OS development was creating”, but Nokia (luckily?) currently have no WP sales. In my opinion, there is nothing to be thankful for. So my answer is “No”.

                      Well, we are just beating the wind here, so I’m going to do something more useful. Cheers! :)

                    • MF

                      Just to clarify on the cost of employee – payroll is only part of the story. Other costs can be quite significant, e.g. insurance/retirement/vacation and other fringe benefits, training, support services (e.g. HR, supervisors, IT) and even office space rental and hardware/software licenses. You can just google this for more info. Of course this is subjective, but one website even claimed that once you add all that up, the total cost of an employee can be double that of their salary.

                      Almost everything can be done cheaper if done in-house. If you prepared your own food it can be cheaper than going to a restaurant. Outsourcing makes sense if it offers some capabilities that you lack. In this case, it does seem that Nokia lacks strong capability in software design and UX, judging from their experience in Symbian. Each iteration took forever to roll out, and at any given point in time, Symbian was never comparable to iOS or Android.

                      Now every Symbian devotee swears that it is the most advanced, sophisticated, etc etc platform in the world. Assuming that is true, one can only conclude that it is Nokia that lacked the competency to take full advantage of such a powerful platform but turned it into mockery instead. This only strengthens the case for outsourcing the OS completely and focus on what Nokia is good at, which is hardware and location services.

                    • jiipee

                      @MF That is very true. As a former business accountant in Finland in a company, which employed mainly engineers, the average total cost including overheads was 120.000-140.000EUR. Management personnel above that.

                      Nokia is not the best paying company outthere, at least in Finland.

                      Juha-Pekka Helminen – a former Nokia director – gives a ballpark figure of 109k€ per person for each outsourced Nokia employee. That includes also
                      https://twitter.com/jphelminen/status/294860314472767490

                      He also says – and Id assume he know even from official sources – that 2.300 were moved to Accenture.

                      I would claim that 120k€ would be an accurate enough figure. That would mean 600 million a year for 5000 devs. Some sources evaluated that Meltemi was 1-2000 people and majority were German, which would mean higher than average costs. 300 million would be a good estimate.

                    • rustyknight17

                      pasanen hate to break it to u , but Meltemi was only 2 months from market when it was cancelled ….

    • migo

      You have to factor in the platform support payments as well, which would bring the effective cost of the license down. The deal was that Microsoft gives them money to start, and then Nokia pays them back in some fashion.

  • incognito

    This is great, you adopt a platform that is ruining you, and then you pay with linear increase to the developers of that platform because they flashed you with some money upfront (which you flashed to your shareholders, otherwise they’d take you out and burn you on a stake, with pitchforks n’ all). No matter how I dislike Microsoft, they’ve made a brilliant move business wise. Not their fault Nokia were stupid enough to go through it.

    • Jiipee

      Id expect that the board have known. Only the minor shaholder have been fooled. Just look at the communication on this matter from the beginning on.

      If I wouldnt need to give my name to the financial inspection officials in Finland, Id ask for a formal investigation, if Nokia has has broken the finnish law. They should have indicated this from the very beginning since “it would be significant information that could have an impact on the share price” as we’ve seen today.

      • GordonH

        Now people should start understanding that Elop is not just dumb, Elop is still working for the benefits of MS.

        • Pasanen oli hieno mies

          In reality Elop probably saved Nokia.

          Symbian religion was killing Nokia.

          Yes?

    • dss

      yuuuup.. what Microsoft did to Nokia should be in every business textbook printed after 2011. Its good stuff.. whoever came up with the deal deserves a huge bonus.

    • pathetic

      man has a bit of searching , in all mobiles collapses , microsoft has been involved in most , just read Tomi Ahonen ‘s blog , I have 2 days that I’m reading it (I noticed it, because many people here appointed him much) and now I can see reality.
      Microsoft only needs someone to do the phone ( nokia ) , but why pay to someone if you can make your own ?
      dont break your head , the circle is closing , the plan is being carried out as planned , nokia in the coming months will be bought by Microsoft , Elop did enough to nokia not had a chance to do anything.
      I come to the conclusion , that in accordance microsoft with nokia , a condition was that Nokia should be a CEO that Microsoft chose, I think nokia is sold to Microsoft a while ago, they will only make official in the coming months.
      Microsoft wanted to take advantage of the name ” NOKIA ” seeing their fans and the great love he had for nokia , but never anticipated that Nokia is not only the name , if not , a philosophy that was betrayed and microsoft have paid the price .
      another thing that makes me very strange .
      Why Nokia , do not pay dividends to their owners ?
      maybe because those who run nokia ( CEO ) are the owners ?

  • nabkawe

    I think Nokia shouldn’t pay royalties for an OS that is unfinished … even after Portico WP8 is still far from good … Not PERFECT but far from GOOD … its missing so much features, the promised Apps compatibility not only is a LIE , but also a developer’s nightmare.

    • Viipottaja

      Luckily it hasn’t. The platform support payments have more than cancelled out the royalties.

      • Noki

        so the patent portfolio rights to Microsoft is free of charge, good to know, Nokias independence also free of charge?

        • Viipottaja

          How do you know they were free of charge? How many were there? Did Nokia get any rights to MS owned IP? Do you know if the platform support payment is the only monetary or in-kind flow from MS to Nokia?

          Even if some IP right were licensed to MS for free, only time will tell (yes I know, your view is that the strategy is already a complete failure) if that was worth the investment (of presumably the forgone IP revenue that probably would not have come Nokia’s way anyway).

          • URNumber6

            IP rights were not just licensed to MS for free, thousands of NOKIA patents were transferred into a third party company, Mosaid Technologies, at no cost and MS now receives one third of the licensing revenues from those patents even though they contributed nothing to the development of the technologies.

            They also get to use those patents against their competitors.

    • dss

      WP8 is 1.0 … you are going to have to wait for at least 3.0 if you want stability. If you want stability and WP.. go with Windows CE ver. 7.8

      • Noki

        not windows C.E. that thing is terrible.

        • dss

          Its more stable than the mobile version of NT at the moment.

          • Jerome Horno

            ???? so what?? I don’t care at all. I used to use Symbian mobiles which never have crashed from buying it till technical death. So, why I am to care that one not good thing is not worse then another not good thing? That is exactly why I do not want to enter this nonsenses at all. I prefer thing which is good and next model which can be better.

  • stylinred

    ROFL a mere 4.4 million units and now Nokia has to pay MSFT? bwahahahahahaha that was some deal Elop made for Nokia…. ROFL

    • rustyknight17

      Yup

    • pathetic

      that’s not the worst. the worst is that the nokia lumia are not sold at the price that must be sold , the price are very low , nokia sat alone in the stick

  • Luisito

    Repeat before me: when you work with MS, work for theirs goals, not yours own goals

    • dss

      A lot of people wonder how Microsoft managed to be where they are for .. almost 20 years now.. well, this is how.. they know how to play the game.

      Windows NT has been ruling the consumer desktop market for.. ya.. 20 years (it came out in 93) which is unparalleled .. no other software “eco system” has ruled a market segment for that long. I guess Symbian comes in a close second.

      Unix of course.. but that is more enterprise, and.. whatever apple have with OSX now.. about 8% market share.

  • torcida
    • RIM

      Nice…. soon on my bb10

    • fff

      nice, it is said to be ported to symbian

    • Noki

      cool will install it now

  • dss
  • Cod3rror

    Nokia are suckers. And they got suckered by a master of suckering suckers like Nokia.

    Did you really believe Microsoft would help Nokia? Look up past history of Microsoft’s business partnerships, how they turned out for the other partner.

    Nokia are idiots or corrupt, plain and simple. Should’ve gone with both Android and WP, Samsung an electronics company does that. Yet, Nokia, who only manufactures phones, cannot.

    The whole market asks them for an Android phone… They release WP.

    • Jim Gordon

      Not whole. Some asked also for MeeGo. However not many asked for WP indeed.

  • Jim Gordon

    Perhaps this fees for MS are the reason why Nokia is unable to pay dividends to stock holders or other investors? So the model has turned to create money for Microsoft?

  • James

    sub.

    • James

      sub.

  • James

    FFS subscribe, third time lucky, maybe.

  • serenitatis

    For premium partners all licence fee is back via maketing support. Vendor pay to Microsoft, Microsoft pay back with ad support etc. Finaly vendor give 250 millions to MS, and MS back that sum.

    • Noki

      Sorry but that made it more confusing…

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