Microsoft Corporation (MSFT): $1B from Nokia Corporation (NOK)

Microsoft Corporation (NASDAQ:MSFT) and Nokia Corporation (NYSE:NOK) have developed a tighter relationship in the last few months, since Nokia announced it was dropping its native Symbian operating system and was adopting the Windows Phone operating system for its Lumia line of smartphones. And as part of its gratitude for confidence in the platform, Microsoft had been making “platform support” payments that have been more than the royalty payments Nokia sent back to Microsoft for sales of the Windows smartphones.

Apparently the tables are due to be turned.

In its earnings report released this week, Nokia Corporation (NYSE:NOK) revealed that it is expecting to pay $1 billion in royalty payments to Microsoft Corporation (NASDAQ:MSFT) in the very near future, an amount that is says will outpace the amount of platform payments from Microsoft. What does this mean?  Nokia in the past had not sold enough smartphones to make royalty payments that were greater than the platform payments from Microsoft. But now, apparently Windows Phone and Nokia Lumia handsets have been gaining enough momentum that Nokia believes it will neturalize the current quarterly platform payments of $250 million by Microsoft since the alliance started in 2011.

It is reported that Nokia Corporation (NYSE:NOK) sold 4.4 million Lumia handsets in the December quarter, which was four times more than in 2011. and it seems that overall, the Microsoft Corporation (NASDAQ:MSFT) Windows Phone operating system has been slowly gathering market share in the smartphone market, with predictions that the current 2.4-percent market share would increase to more than 11 percent in just three years.  But this might not count some current chatter surrounding Windows Phone.

What might impact the prediction of market share?

There is some talk that Microsoft Corporation (NASDAQ:MSFT) is currently working on a new version of the Windows Phone OS that would be used in “entry-level and midrange” smartphones, which could be used in emerging markets like China, India and Brazil. The unidentified sources report that this new OS design would be available in the middle of this year, and handsets running the new design could be available late in the year. These  new phones would go along with the current top-level smartphone makers like Lenovo, Huawei and ZTE which have all announced plans to launch Windows Phone handsets sometime this year.

What do you think? Do you think Microsoft Corporation (NASDAQ:MSFT) will continue its momentum with Windows Phone? Can Windows Phone save Nokia Corporation (NYSE:NOK)? We would love to get your comments about either company and their smartphone alliance in the comments section below.

DISCLOSURE: I own no positions in any stock mentioned.

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