Nokia's secret weapon in Microsoft sale negotiations: A working Android Lumia

Nokia had an Android-powered Lumia up its sleeve before it entered talks over the sale of its devices business to Redmond.

It turns out Nokia had a working Android Lumia smartphone up its sleeve when it headed into negotiations with Microsoft over the sale of its devices and services business .

A team within Nokia had made an Android handset well in advance of the negotiations between the two that began in February this year, according to a New York Times report, which cited two sources briefed on the effort.

While its existence is not so surprising, as the report notes, it could have served as a reminder that Nokia had another option besides selling the company during the negotiations over several months that led to the announcement of the $7.2bn sale earlier in September.

Unlike Microsoft's other Windows Phone partners Samsung, HTC and Huawei, Nokia had entirely committed to Windows Phone in the long-term and in return received, among other things, support funds from Microsoft of around $250m a quarter . But Nokia had the option walk away from the agreement in 2014.

And with Nokia's concerns about Microsoft entering the smartphone hardware business itself make Nokia's flirtation with alternative OSes and the existence of a working Android Lumia even less surprising.

As ZDNet reported in March , following Microsoft's Surface tablet launch, Nokia acknowledged a new risk in its 2012 annual SEC filing that Microsoft may expand from tablet hardware to smartphones, which it feared could lead Microsoft to focus on its own devices over those of its partners. 

At the announcement of the acquisition Nokia chairman Risto Siilasmaa reiterated this concern, saying that Microsoft's Surface-led entry into hardware in June 2012 triggered a search in Nokia for "all imaginable alternatives".

The question for Microsoft's remaining Windows Phone partners is whether now, with Nokia's devices business under Microsoft, they share the same view as Nokia — even if they are a lot less dependent on Windows Phone than Nokia was.

As for Nokia — the pieces of the company that aren't being sold to Microsoft — it could still in theory make handsets based on Android, but that won't be able happen until at least 2016 .

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