In a high-stakes gambit to get a serious foothold in the global smartphone market, Microsoft is reportedly betting big on its partnership with the world’s biggest cell phone maker — to the tune of a billion dollars.
That’s how much Bloomberg News estimates the software giant is investing in the deal to replace Finland-based Nokia’s Symbian operating system with Windows Phone 7, currently available on a small number of phones made by LG, Dell, Samsung and HTC.
Nokia Will Buy Licenses
Bloomberg reported that Microsoft will spend “more than $1 billion” in a five-year agreement to promote and develop Windows-based handsets, citing “two people with knowledge of the terms.” In exchange Nokia will buy a license for each Windows copy, rather than invest further in Symbian, which has failed to attract much interest in the important U.S. market where it competes with Google’s Android, Research in Motion’s BlackBerry and Apple’s iPhone. Google gives its system to manufacturers for free in order to generate ad revenue and sell apps.
Overseas, Nokia’s phones have been popular in developing markets. Windows Phone 7 had a two percent share of the smartphone operating system market at the end of 2010, after it was introduced in early November, according to the research group NPD. Microsoft said it shipped two million handsets running Phone 7, but it’s unclear how many were sold.
Last week Microsoft had to suspend an update for the system for Samsung phones after an embarrassing glitch made some of them crash or shut down completely. The update resumed after about 48 hours.
Nokia’s investors haven’t shown much confidence in the deal, with shares dropping 26 percent since it was announced on Feb. 11, Bloomberg noted. The deal was made by former Microsoft executive Stephen Elop who is now Nokia’s CEO.
Make Or Break?
While the billion-dollar price tag of the…