Software giant Microsoft will reportedly pay Nokia more than $1 billion for putting Windows Phone 7 OS on its Nokia handsets.

On the condition of anonymity, two sources told Bloomberg that the agreement between Microsoft and Nokia will last for five years. However, the final agreement is yet to be signed. For this reason full details of the agreement have still not been made public.

The report claims that Microsoft will pay some money up-front, plus give Nokia a share of advertising revenue. Microsoft is paying Nokia to allure the Finnish handset maker from Android and other mobile operating systems. But, Microsoft expects that the long-term deal will prove to be a big win for it.

However, many Nokia investors are criticizing the agreement between the two companies. They fear that Microsoft could brutally kill Windows Phone 7 if it fails to meet expectations, as the company did in case of the KIN.

Meanwhile, Microsoft has claimed that its Windows Phone Marketplace has now grown to 9,000 apps, and 32,000 registered developers. The company said Windows Phone developers tools had already been downloaded in excess of one million times.

However, the figures are not very impressive when we take Apple’s iOS and Google Android OS into account.