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Microsoft to spend billions of dollars in supporting Nokia

Microsoft are set to hand over billions of dollars to Nokia after they ditch their current smartphone operating system in favour of Windows Phone 7. According to Nokia CEO anyway, who has defended the deal against some public backlash.

Microsoft and Nokia have announced their partnership last friday and apparently Nokia workers and investors have been less than happy with the shift in company direction. The stock dived a whopping 14 percent and Finnish employees used flex time to leave work early with their heads in their hands.

On Sunday, a day ahead of the Mobile World Congress trade show in Barcelona, Elop spoke to the media and analysts saying that apart from the benefits of the alliance, that Microsoft will be handing over billions of dollars to Nokia to switch to Windows Phone 7.

Nokia CEO Stephen Elop: facing some flak over Microsoft partnership

Elop said “This is something I don’t think was completely explained,” and he added that Microsoft’s payments has ‘substantial value to contribute’.

Microsoft have had a tough time so far with their Windows Phone 7 software, taking only a few percentage points of the smartphone market, according to analyst reports. Nokia’s worldwide market share in smartphones was just over 30 percent in last year’s fourth quarter, down from 40 percent a year before. Nokia have always used the Symbian operating system, which is a relatively old software package by today’s standards. While it is still well liked, it was never designed to be used with touch screen designs.

Nokia will be reversing the flow of money a little, but paying Microsoft royalties for the use of their software, as other manufacturers currently do. It will however save money by not continuing development of its own software. Elop said that the net benefit even considering this, is still in the billions of dollars. This is a complete reverse from rumours that Google pay manufacturers to use Android.

Given Elop’s history as a Microsoft chief before he joined Nokia, he has been asked before if he was a ‘Trojan horse’, meaning a Microsoft ‘insider’ who has penetrated Nokia and steered the company in a direction favourable to Microsoft. He said “The obvious answer is no, thanks for asking.”

Elop has said that Nokia’s move to Windows Phone 7 has been unanimous within senior management and it was not his sole decision to do so.

KitGuru says: Are you sad to see Symbian gone? What will change within Nokia after this deal is set in motion. We can imagine the software development staff will be made redundant, unless there are other jobs they can take within the new company reshuffle.

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