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Nokia still has to pay Microsoft 500 million euros ($650 million) as part of its agreement to use the Windows Phone operating system.
That’s the amount that Nokia will have to pay over the life of their agreement after taking into account the “platform support payments” that Microsoft pays to aid in the development of Windows Phone products. The length of the agreement wasn’t disclosed in the company’s annual report filed with the Securities and Exchange Commission.
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Curiously, Nokia has yet to take a real financial hit from the licensing fees it is required to pay Microsoft because of the platform support fees. Nokia said that Microsoft makes a quarterly payment of $250 million, and that it was actually a net positive recipient of funds last year.
Nokia expects to again be a net recipient of funds this year even after the licensing fees, although the company said that the support payments would only “slightly” exceed the licensing fees.
In addition, Nokia reiterated its long-term target of growing its device and services revenue faster than the broader market, and yield 10 percent operating margins after excluding one-time items. While the company has an impressive new portfolio of Lumia smartphones, the overall business has yet to truly turn around, thanks in part to the continued deterioration of its legacy Symbian phone business.
One area that Nokia is focusing on is the Chinese market, which the company conceded in the filing has been a “very difficult market for us.” In the past, the company had worked with a network of distributors and resellers, but now carriers are bundling devices and data plans together with an emphasis on lower-priced smartphones, which it said hurt Nokia last year.
That’s a big reason why Nokia introduced two lower cost Lumia smartphones during Mobile World Congress, to better address the China market.
Nokia also mentioned its Nokia Siemens Networks joint venture, which provides telecom infrastructure equipment. The company plans focus on profitability and cash generation over revenue, as devote more resources into 4G LTE equipment in countries such as Japan, Korea, and the U.S. Nokia believes that longer term, Nokia Siemens’ operating margins could be between 5 percent and 10 percent, excluding one-time items.
