There was a doozy of a footnote in Nokia’s earnings report on Thursday.
Since signing its deal to go with Windows Phone, Nokia has been getting $250 million in “platform support payments” from Microsoft. Nokia also pays Microsoft an unspecified amount of royalties for using Windows Phone. It varies based on the amount of phones Nokia ships and there are also minimum commitments.
The interesting part is that Nokia says that, after initially getting more from Microsoft than it pays, Nokia is essentially now going to have to start paying more to Redmond than it gets.
“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,” Nokia said. “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.”
So, to recap, Nokia has bet the business on Windows Phone. After getting a pile of money initially, it now owes Microsoft more than it can expect to get. And Microsoft might be doing a competing Windows Phone of its own.
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