Microsoft’s Nokia Deal

March 8, 2011 5:38 am

This from Bloomberg:

Microsoft Corp. will pay Nokia Oyj more than $1 billion to promote and develop Windows-based handsets as part of their smartphone software agreement, according to two people with knowledge of the terms.

Nokia will pay Microsoft a fee for each copy of Windows used in its phones, costs that will be offset as Nokia curtails its own budget for software research and development, said one of the people, who declined to be identified because the final contract hasn’t yet been signed. The agreement runs for more than five years, the people said.

We were reminded of the original “pay per processor” licensing deal that made Microsoft the giant it is today, where the OEM paid a license fee to MS for each PROCESSOR sold, regardless of whether Microsoft OS was used or not. Of course, the new deal is not the same (that practice has been considered monopolistic, and has since been discontinued). But Microsoft is definitely struggling in trying to reinvent its magic, or should we say, reverse engineer its success.

Taleb’s definition of the Reverse Engineering Problem:

Reverse Engineering Problem: It is easier to predict how an ice cube would melt into a puddle than, looking at a puddle, to guess the shape of the ice cube that may have caused it. This makes narrative disciplines and accounts (such as histories) suspicious.

Will Microsoft be better off trying to predict how an ice cube would melt into a puddle, than predicting the other way round? Trying to reverse engineer the success of the PC Era’s MS DOS/ Windows will in all probability be an exercise in futility.

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