Love comes at a high price. The software giant is set to dig deep for the phone company’s unfettering support on its new Windows 7 software.
The US$1 billion deal, tipped by Bloomberg, could prove lucrative for the number one phone maker by shipments, as its Symbian OS struggles to compete with the like of Apple iPhone’s iOS and the slew of Android handsets released by rivals LG, Samsung and HTC.
It will implicate the two tech giants into developing the Nokia Windows 7 handset together. Nokia in turn will pay Microsoft a fee for every phone sold using its software.
The European phones giant is also said to be eager to sign a deal as it will give them a point of difference from all the new Android rivals that have burst on the scene.
The deal although not yet signed, would give Microsoft a leg up in the highly competitive phones marketplace and instant access to the millions of Nokia users.
Steve Ballmer’s company will also be enabled to use the phone outfit’s Navteq mapping products helping them to expand geolocation services including selling local advertising and coupons.
“This gives Microsoft scale and allows Nokia to rip out costs,” said Colin Gillis, an analyst at BGC Partners in New York.
“Microsoft is getting the platform boost that comes from acquiring a Nokia for about a billion dollars”.
Gillis now recommends buying Microsoft shares, although its stock has declined 7.8 percent so far this year.
According to sources the deal is part of the software giant’s bid to ensure Finnish based Nokia doesn’t jump ship to the Android platform.
The two giants already have some other ties – Nokia current CEO Stephen Elop is a former exec at the software giant.