In 2013, Microsoft (NASDAQ:MSFT) purchased Nokia’s phone division for $7.2 billion. The move brought together Microsoft’s Windows Phone 8 with the company’s leading hardware supporter. The two firms had collaborated to create Nokia’s Lumia 1020. This collaboration played a significant role in Microsoft’s decision to modify the operating system on its Windows Phone. Microsoft had been financing Nokia even before it acquired the phone division. The company was offering about $1 billion each year and this motivated the phone manufacturer to select Windows Phone as a partner for its Lumia development project.
Microsoft is now looking ahead and it has been suggested that the company has selected Samsung and Sony to develop its Windows Phone 8 phones. The company is looking for the same kind of deal it made with Nokia. The company is expected to pay the two companies to come up with a Windows Phone 8 model.
According to a tweet by Eldar Murtazin from Mobile Reviews, Samsung has agreed to come up with a Windows Phone 8 model for Microsoft. Samsung is going to get $1.2 billion in this new deal. Microsoft had initially offered $1 billion but it seems like Samsung negotiated for a higher amount.
Sony is also part of the deal as Microsoft tries to align itself with some of the leading phone manufacturers in the globe. Microsoft has approached Sony to develop a Windows Phone handset. The company is expected to offer about $500 million for this deal.
Microsoft is not taking any chances with its Windows Phone 8 and this may explain its decision to include Huawei in the development process. Huawei is expected to get about $600 million, which is actually more than what Sony is getting to develop the handset. Sources also suggest that a few other phone manufacturers will be involved in the development process but they are expected to get less money for their deals. Microsoft is expected to spend another $300 million on deals with other phone makers. Huawei will get a lot more than money from this deal. The phone maker is not well known especially in Europe and North America and this deal is an opportunity to boost its visibility. This deal will give the company the exposure it requires to improve its sales and revenue.
Despite of the low amount that Sony is receiving from the deal, the company reported an increase in profits in 2014 and the money it gets from the deal will come in handy as it tries to fulfill its organizational objectives. Sony needs the money that it is going to get from this deal. Its main businesses are not performing as expected. Sony’s TVs and cameras units are not doing well and the money will help the company to invest in research and development and come up with new models to entice the market.
It is interesting to note that HTC is not involved in the WP8 deal. There are no indications that the phone maker has made a deal with Microsoft. However, the company may be keeping the deal a secret. The phone makes is facing some financial difficulties and a deal with Microsoft would be a significant boost for the Taiwanese company. There are signs that HTC is no longer keen on the Windows Phone because it has not developed another handset after its 8S and 8X duo.
Another concern is that Samsung is not developing any other handsets. It is simply enhancing its existing models. This is an issue because Microsoft now has control over the Lumia model and it has about 90% of the mobile phone market. Microsoft has the capacity to develop its own hardware but it seems like the company prefers to offer its software to phone manufacturing companies. This means that if phone makers like Samsung are not producing new models, Microsoft will offer fewer software licenses. This is the strategy that has allowed the company to attain success with its Windows Phones.
Microsoft and the phone manufacturers involved in this deal have not released any official statement on the matter. Investors and analysts have to wait to get details about any payments from Microsoft.
There are suggestions that Nokia intends to develop a handset that runs on Android. This is significant because Microsoft has recently taken over the phone unit at the company and it is making huge sums of money from its Android licensing deals with phone makers.