Business for the sake of business is very common these days especiallyamong multi-national firms. This mutual dependence ties multi-nationals in a long term relationship. Same is the case with Nokia and Microsoft.
Nokia will make handsets configured with Windows Phone 7 operating system for Microsoft. Microsoft will pay U.S $1billion to Nokia. On the other hand Nokia will pay license fee to Microsoft for each copy of windows that it will use in cell-phones.
The duration of contract between Nokia and Microsoft will be 5 years. This deal will forbid Nokia to sign any kind of partnership deal with others (much talked about Android).
A major question arises here, why Microsoft has marked Nokia for this deal? Most probably because Nokia is the World’s largest mobile phone manufacturer and Microsoft can target huge market after this deal.
Do you know who is the Chief Executive of Nokia?, Stephen Elope, former Vice President of Microsoft. It could be one of the reasons behind this deal because Elope better understand the strategies on Microsoft and can take Nokia to a higher level of competition by signing such deals.
This Strategic partnership will be beneficial for Microsoft as well as Nokia. Market share of Nokia is declining a bit because of other companies that provide Smart-phones. It could be a golden opportunity for Nokia to retain its market share and move forward.