Microsoft is said to have agreed to pay more than $1 billion to Nokia to get the phone maker develop and market a new line of cell phones that will use Windows Phone as the operating system. The report by Bloomberg is said to be based on information from a pair of sources familiar with the negotiations. The two companies have declined to confirm reports about the details.
The deal could provide Microsoft with a major entry into the cell phone market for its latest mobile phone operating system, which lags far behind Google's Android and Apple's iOS. Under the reported terms of the deal, Nokia is to pay Microsoft each time it ships a phone using its software.
The arrangement, which is said to cover a term of at least five years, could ultimately provide Microsoft with an profit on the contract if Nokia shops enough phones. It will also reportedly call for Navteq, Nokia's mapping technology, to be used in the new phones, and for the two companies to split earnings from selling advertisements and other services.
Nokia has been struggling in the smartphone market since the advent of Apple's iPhone and the host of Android-based devices. Microsoft's entries into the smartphone operating software business have been coolly received and the company has only a few points of market share behind Apple and Android.
According to Bloomberg, Nokia was considering going with Android as the base software for its upcoming line of smartphones. In addition to the financial support from Microsoft, Windows Phone was seen as a way to help the phone maker differentiate itself from the growing number of Android-based devices.