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Amid alarm, Nokia CEO defends Microsoft deal

Nokia will get billions of dollars from Microsoft to ditch its current smart-phone software in favor of Windows Phone 7, Nokia CEO Stephen Elop said Sunday, in a defense of the deal.
/ Source: The Associated Press

Nokia Corp. will get billions of dollars from Microsoft Corp. to ditch its current smart-phone software in favor of Windows Phone 7, Nokia CEO Stephen Elop said Sunday, in a defense of the deal.

Nokia, the world's largest maker of phones, and Microsoft announced their alliance Friday. Both investors and employees reacted with dismay: Nokia's stock dived 14 percent and Finnish employees used flex time to go home early.

On Sunday, a day ahead of the start of the Mobile World Congress cell phone trade show in Barcelona, Nokia CEO Stephen Elop told press, analysts and industry players that apart from the benefits of the alliance that were laid out Friday, Microsoft is paying Nokia billions of dollars to switch to Windows Phone 7.

(Msnbc.com is a joint venture of Microsoft and NBC Universal.)

"This is something I don't think was completely explained" on Friday, Elop said.

Elop said Finland-based Nokia had been courted by Google Inc. as well, which sought to convince it to use its popular Android software for smart phones. Microsoft's payments are a recognition that Nokia had "substantial value to contribute," said Elop, who until recently was a Microsoft executive.

Redmond, Wash.-based Microsoft introduced Windows Phone 7 last year, on phones made by LG Electronics Inc. and HTC Corp., but has only captured a few percent of the smart phone market, according to analysts. Getting Nokia on board sets Windows Phone 7 up to gain a much bigger share of the market.