Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

Summary: Nokia should hedge its bets on software across the board. Nokia should offer Android, Symbian and Windows Phone 7 devices.

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Nokia is reportedly mulling whether to offer Windows Phone 7 phones according to the rumor mill.

The idea isn't half bad.

First, these rumors may be completely half baked, but they do add up and have appeared before. Nokia CEO Stephen Elop is a former Microsoft man. He's evaluating the Nokia's prospects and aiming to reposition the company. By now he has figured out that Nokia's core competency is hardware and scale.

Of course, Nokia may have some software mojo, but it has been consolidating its Symbian efforts. Meanwhile other analysts have said Nokia should ponder Android devices. Why stop there? Nokia should evaluate Windows Phone 7 and Android devices. Why shouldn't Nokia be a player more like HTC or Motorola, two companies that primarily focus on hardware?

Nokia should hedge its bets on software across the board. Nokia should offer Android, Symbian and Windows Phone 7 devices.

Here's the Google Translation of Eldar Murtazin's newsletter on Nokia-Microsoft:

In the last month behind closed doors is a discussion of expanded cooperation Nokia and Microsoft (two-way discussion, initiated by the new leadership of Nokia). Not simply the exchange of technology, but creating an entire line of Windows Phone devices that may go under the name Nokia, through the sales channels for the company, and will also have the characteristic features of its products. This is a desperate measure of the two companies.

One quick thing to note: Desperation can sometimes work. Windows Phone 7 is a good mobile operating system in search of distribution. Nokia has scale, global reach and products for every price point. Nokia has everything but an OS. On paper, the Nokia-Microsoft thing could work. Matthew Miller notes:

I am personally a fan of the new Windows Phone 7 operating system, I have always been a Windows Mobile fan, and also enjoy using Nokia devices. WP7 is obviously a much more modern and exciting operating system than the current Symbian OS found on devices like the Nokia N8, but Nokia is working hard on future versions of Symbian and their MeeGo OS with Intel so I highly doubt they are going to throw in the towel and adopt a Microsoft OS that is in its infancy and has a long way to go. If they were going to adopt another OS, it would make more sense to go with Android that is far more advanced and selling at a much faster pace than anything else at the moment.

Wharton professor Kartik Hosanagar said in a recent Knowlege@Wharton article:

Not owning the software platform used in its phones means that Nokia would be "giving up significant revenue and profit potential. So it wouldn't be my first strategy. But if Nokia can't get its act together in a year, I think it may well be the only thing to do. I think Android on Nokia could be very appealing to consumers. But Nokia is not going to embrace the Android bandwagon so soon. There's the issue of giving up on a lucrative software platform. And then there's the question of whether a former Microsoft exec will so easily embrace Google's Android."

Other Wharton profs say that Nokia's choice of operating system is the biggest decision Elop will make.

Miller calls the Windows Phone 7-Nokia rumors wild, but I don't see Nokia's software strategy as a zero sum affair. Nokia should hedge its mobile OS bets in a few places. And Microsoft would give Nokia some sweet terms just to get distribution. Nokia's future business model may look a lot more like HTC's.

Nokia's choice is to fight the last war or move forward. When it comes to mobile Microsoft is basically in the same boat. Those facts may make Nokia and Microsoft good allies.

Also see the latest on Nokia and Windows Phone 7.

Topics: Operating Systems, Microsoft, Mobility, Nokia, Software, Windows

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81 comments
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  • Disagree

    If HW and scale is your core competency, why put yourself at a disadvantage by using a more expensive OS that has not proven itself in the market?

    It seems to me Android would be a much better bet. If Nokia can produce better HW for less money, they should attack the Android market and become a dominant player there.

    Sharing the spoils with MS does not make much sense to me. If you somehow help MS to become a major player in the smart phone market, guess what the payback will be?

    A higher price for the OS. Only a fool would go there.
    Economister
    • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

      @Economister
      I don't think Nokia would go with Android, because it is from Google and if they want to go with Exchange and office integration, why the heck they have to go via. WP7+Nokia is good combination and better alternative to both Android and iPhone. And how much higher per phone $150 or $8 to $15. Even at $15 they get full support from Microsoft unlike free and hit the road. Also Android is not free for your information. You are tied to do Market, Google apps and pay for them.
      Ram U
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @Rama.NET
        A. Exchange integration is in Android as of 2.x
        B. MS has screwed many hardware vendors over and over again. Would Nokia risk being the next one?
        C. Android is a proven platform. WP7 is yet to prove itself.
        D. Google market has the largest number of free apps
        E. Support from MS means nothing, except if you have no software competency in your company whatsoever. Not the case with Nokia.
        kirovs@...
      • MS party line?

        @Rama.NET

        Android is not free because of MS's likely bogus patent claims?
        Economister
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @kirovs@...<br>1. You proved me. That is what I am saying. Nokia already has an agreement with MS for Exchange integration on Nokia sets. Why do they need another one?<br>2. Android is also doing the same. They have no support for the Vendors. Whatever Microsoft did with Windows Mobile, Google is also doing the same. Fragmentation. Can I upgrade my EVO 4 to Gingerbread as soon as it is released, no I live at the mercy of Sprint and HTC and likewise. See the issue. Google has no control. And bottom line the users are screwed. <br>C. Android is proven to whom. I see a lot of bugs and issues daily on my Samsung Galaxy Tab, and HTC EVO. The peep on EVO just crashes a lot of times and I have to boot the phone regularly. iPhone and iPad are clear winners here.<br>D. Who cares about free apps, when they don't do what the user wanted. Also why do I have to send my info freely to anyone. Google doesn't care to check the apps and their quality like Apple and Microsoft does. Quality of testing sucks. Period.<br>E. Can you prove this. I can prove this. If you are certified by Microsoft means, your app is 100% working. I know this, I have developed apps for all those platforms.

        Please don't blind yourself to tying to one platform. I enjoy my EVO, Galaxy Tab, iPhone 4, iPad, Samsung Focus and HD7. Each one has its own + and -. When you are using Technology, remember it is created by Man and will have issues.
        Ram U
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @Economister
        Nope, You have to pay for google apps and marketplace.
        Ram U
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @Rama.NET - your points and response - nicely done - and the silence is deafening
        ItsTheBottomLine
      • Not free

        @Rama.NET

        So then you do agree, contrary to your previous assertion, ("Also Android is not free for your information.") that Android is indeed free. The price of applications was not the point of the discussion. Since android is indeed free, the HW manufacturer can install it without having to pay any licensing fees whatsoever. Not so with WP7.
        Economister
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @Economister

        In regards to Android being free...

        Keep in mind that there are still costs associated with using Android.

        1. development costs for creating a custom UI
        2. maintenance of a software support staff
        3. license fees for some audio and video codecs

        These are things that Nokia would not have to worry about if they chose a solution like WP7 because they would be taken care of by Microsoft.
        Winning Guy
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @kirovs@...
        1. Android is not free and if you watch HTC and other producers of Android devices they are paying fees out to Microsoft for patient infringement...

        2. Licensing Exchange Active Sync is not free... it cost money - ask Google and Apple

        3. Free apps suck most of the time and data and information is given away freely without users knowledge - this has been shown on both Apple and Google respective.

        4. Support from Microsoft means support... and deep support at that - if you know a thing or two about how Microsoft support it's partners you'd know better.
        jessiethe3rd
      • Nokia and Android a HUGE no-no for two reasons...

        kirovs@...

        1) Nokia, unlike many other mobile vendors, has one thing in common with Apple's iPhone products... they are primarily aimed/marketed at the higher-end market (usually with pricing structures that reflect this fact - maybe not so much over there in the US where there is lot of price-subsidising often via network-provider lock-ins).

        Simply put, offering a high-end phone with an open-source mobile OS makes for a self-contradictory product; who's it marketed to?

        b) Nokia have always had consistency with their mobile OS across a plethora of devices. Even where the OS has used different architectures, the interface principles have flowed across.

        In contrast, one needs to remember that Android seems to have a multitude of flavours, depending on what each mobile vendor chooses to do with it. Now I'm not saying this is a weakness of Android (far from it, in many ways); just highlighting why this may not be something which would be viewed in a favourable light for Nokia... not by Nokia, and likely not by may of the Nokia faithful
        kaninelupus
    • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

      @Economister
      I could think of a few hundred reasons. But, here are two:

      They don't hate Microsoft like some other people do.

      They don't want to sell devices with Android attached.

      Bonus: Seems like a good business deal!

      And, thank you for playing!
      eargasm
    • WP7 might just be free...

      @Economister ... Microsoft is desperate not to allow this product to be a failure. And a fool CEO and his fiduciaries money is soon parted.

      The 'two way dialogue' needs to be something like this: "Mr. Ballmer, can you hear me? Great. We are Nokia. We sell many millions of phones, and we are interested in smartphones. Now we can have Android and its marketplace and ecosystem for free. What are you willing to do for me today, tomorrow, and the day after if we go with WP7? Before you answer, imagine your next two dozen Wall Street analyst meetings, and imagine Goldman Sachs looking over your WP7 shipping numbers."

      An approach like that and Nokia could cart off not only free OS's, but many hundreds of millions of dollars in all kinds of subsidies.

      Or Microsoft could hit the bricks and look for some other sucker licensees.
      HollywoodDog
      • No long term vision?

        @HollywoodDog

        Fine, I will play along. So Nokia gets the OS for free for several years, walks off with a bundle of cash and manages to build a large WP7 business around WP7. What happens when the deal expires and MS wants to make money on WP7, which I can guarantee will happen eventually? Nokia either pays up or starts building an Android business from scratch.

        Maybe not so clever after all?
        Economister
      • Everything has its price...

        @HollywoodDog ... if Ballmer wants Nokia to agree to exclusivity, to not have a parallel product development project with Android or others, that would have its price. If I were Noka, I'd prefer development in all the big smartphone OS's, and I'd like to take such money out of Microsoft as to pay for all of it. That deal is probably possible.

        I agree with you, MS guaranteed 'wants' to make money on WP7. Whether they will ever do so is immaterial. Their 'want' has a fire under them to get as many WP7 phones out in the world as humanly possible. And Ballmer has tens of billions of dollars just sitting around.

        If Ballmer is willing to lose six billion dollars in online ventures (and smile about it), then he's willing to lose billions on WP7.

        He doesn't give a damn how much any of it costs. It's not his money anyway, and if it totally fails, by that time he'll be gone anyway.
        HollywoodDog
    • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

      @Economister

      There's one thing Nokia is famous for - apart form selling lots of dumb and semismart phones - it's has the most hated UI. Trying to use any Nokia phone is frustrating at best.

      WP7 could change all that immediately - just look at the screen on the Nokia phone above - unreadable to anyone over 40 without glasses and a magnifying glass and looks like it was designed by 14 year old boys with ADD.

      Please Nokia, run to MS and beg them.
      tonymcs@...
  • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

    While Android is much more popular than Symbian, almost a sure bet for Nokia in terms of marketing, and similar enough to the Simbian OS to make a transition easy; Windows Phone 7 is none of those things and risky to market. Nokia has no reason to trade one under-utilized OS for another...and while it's easy to say "more platforms, more options"; Nokia has to be wondering if they can even sell enough Win Phone 7 phones to warrant the cost of marketing the OS in the first place. Especially with the failure of the Kin.

    Fortunately, Microsoft has a long history of paying these companies off to get them to try the products anyway. But that's all the more reason for them to hold out.
    Socratesfoot
    • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

      @Socratesfoot
      You forget that since Android has a big market share, Google couldn't care less about Nokia. Microsoft who want market share would help Nokia as much as possible.
      illegaloperation
      • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

        @day2die: You mean like they did with PlaysForSure ?
        Random_Walk
    • RE: Nokia and Microsoft's Windows Phone 7: It could work, but why stop there?

      @Socratesfoot

      "While Android is much more popular than Symbian"

      Except in silly little things like 'sales' and 'market share'.
      Sleeper Service