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Nokia is hooked on Windows Phone, now has to pay for it

Sharif Sakr
January 24, 2013
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When Microsoft and Nokia married at the temple of Windows Phone last year, the dowry was nothing if not complicated. Nokia had to pay a minimum amount in software royalties to Microsoft each quarter, regardless of how many Lumia smartphones it sold, but the financial hit was more than cancelled out by Microsoft's "platform support payments" coming back the other way. At some point, however, the net flow of cash was always bound to switch direction, as the cost of the software royalties grew to exceed Redmond's $250 million quarterly support payments, effectively bringing the whole thing closer to being a zero-sum transaction. According to Nokia's latest financial report, that turning point has now been reached and the company's accountants will have to start writing a minus where there used to be a plus. The extra expense makes it doubly fortunate that Nokia has just returned to profitability -- at least if future quarters prove it really has.

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