In a bid to surge sales and provide better services, Microsoft Corp. entered into an alliance with Nokia. This alliance will mean Windows 7 powering Nokia handsets. The news here is that this alliance has cost Microsoft Corp. a cool $1 billion.
The billion dollar handshake!
Nokia, in turn, will pay Microsoft for each copy of the software that it installs in its handsets. Both Microsoft and Nokia have been increasingly feeling threatened with the existence of other smartphone makers in the category, the biggest ones being Google and Apple.
In plans of using Nokia's mapping service, Navteq, Microsoft will use them for mapping the user's location and provide several coupons based on the same. Microsoft wouldn't be the lone profiteer of this venture; forwards of the sales would reach Nokia, too. The unsigned deal is still in its formative stages; however, people close to the deal have stated it to be a five year long agreement.
A win-win situation for both the parties, the success of this deal will open a fresh perspective for Nokia, that has been going through a rough patch, especially after a sharp drop in its operating margins (from 19 per cent a decade earlier, to 4.9 per cent). All's not well in the Microsoft camp as well, the stocks of the company declined to 7.8 per cent, ever since it lost it’s market share to Google and Apple.