Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Nokia CEO sees 'danger ahead' for Android phone makers

By | August 18, 2011, 5:15am PDT

Summary: Speaking to business leaders in Helsinki, Nokia CEO Stephen Elop sees ‘trouble ahead’ for Android operators in a post Motorola-Google world.

Nokia chief Stephen Elop sees trouble ahead for the Android operating system, in a post Motorola-Google merger.

Speaking to business leaders in Helsinki yesterday, he said that Android operators or manufacturers should expect to see “signs of danger”. Ahead of the merger, while Motorola will be run as a separate company from Google, it will give Motorola a license to use Android for its phones.

Phone builder Motorola Mobility, in case you missed it, will be bought by Google, the Android maker, in a proposed $12.5bn merger — making Google a full-fledged phone manufacturer.

Elop hinted in his speech towards analysts concerns that Motorola could be given preferential treatment over existing Android manufacturers.

But manufacturers are still playing fair. From Samsung to LG and HTC, many manufacturers split their time fairly between providing both Android and Windows Phone 7 to their consumers.

If Google does decide to give the special treatment to its new acquisition, pushing Android away from existing non-Google manufacturers, one can only presume that existing dual Android and Windows Phone 7 providers will sway towards the latter, and away from Android.

The merger between Google and Motorola Mobility could theoretically push existing Android providers into Microsoft’s mobile operating system camp.

But should not come as a huge surprise, coming from former-Microsoft executive, turned Nokia CEO — one of the key people behind the use of Windows Phone 7 on Nokia’s phones.

Android, at least in my books, was always the strong contender to replace Nokia’s ageing Symbian operating system.

Yet, in the beginning of the Android patent dispute where Microsoft demanded licensing fees from Android-shipping manufacturers, for which Motorola and Microsoft are still at each others’ throats, it almost meant we missed the obvious choice: Windows Phone 7.

Windows Phone 7 has only a 9 percent share,  dwarfed by iOS at 26 percent and BlackBerry at 24 percent. Android holds a majority 36 percent stake of the mobile operating system market as of May.

The one thing that I cannot shrug off the feeling for, is if Google becomes a full-fledged phone provider — from hardware through to the operating system — then where does it leave the third party providers?

This merger, could —  I predict — lower the overall Android marketshare. A strong hardware and software ecosystem provided by the one and only Google could push the likes of Samsung, LG and HTC into Microsoft’s arms.

And, considering that Windows Phone 7 has only a 9 percent share, Microsoft will have it arms well and truly open. With Mango around the corner, then it wouldn’t surprise me at all if the third-party providers head in the same direction that Microsoft took.

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Topics

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

Disclosure

Zack Whittaker

I worked briefly with Microsoft UK in 2006 but no longer have any connection with the company. Regardless, I remain impartial and unbiased in my views.

I don't hold any stock or shares, investments or industrial secrets in any company, but have signed confidentiality agreements with a number of UK and U.S. organisations, whose names I am not at liberty to disclose.

I was involved with Kent Union, the University of Kent's student union, undertaking voluntary, non-salaried, elected positions between early 2009 and mid-2010.

No other company, body, government department, non-governmental organisation or third sector organisation employs me or pays me a salary in any capacity whatsoever.

As a freelance journalist, whenever expenses are given and taken by a company that is not CBS Interactive, these will be disclosed in each relevant post to ensure transparency.

I currently work with a UK law enforcement unit, but this is an entirely separate position which bears no connection to other work.

(Updated: 23rd October 2011)

Biography

Zack Whittaker

Zack Whittaker, criminologist who studied at the University of Kent, UK, is a journalist, writer and broadcaster.

After studying criminology at university, though still in his early-20's, he has already had a series unconventional work and voluntary positions. He has worked with researchers studying neurological illnesses like Tourette's syndrome (which he suffers from), has given lectures on the nature of disabilities in the public community, and occasionally ends up speaking on television and radio discussing the events of the day.

He first had academic work published at the age of 22, then still an undergraduate, and has been cited by a wide range of publications: from CNN, the Huffington Post, AllThingsDigital, The Atlantic Wire and CBS News.

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No "danger" of that ...
Still Lynn 9th Sep
@grimesdr
Nokia is only discontinuing Meego in the US for now. Strangely enough they will keep distributing it in the smaller markets. Hmmmmm ...

Samsung is looking to enhance their own Bada (Wave) OS and expand its share. On top of that they just hired the programmer behind CyanoGenMod which is a fork of Android. They can't combine WebOS with anything else without HP's permission because HP doesn't intend to sell WebOS, they want to license it to handset makers.
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Of course Microsoft-man Elop would say that, as Android is a competitor to his favoured Microsoft mobile phone OS, and is trying hard on many fronts to take Android down. Water is wet.
@root12

Yes, this is an opportunity for Elop to say this. BUT, just because he is pro-Windows Phone doesn't automatically mean that this acquirement by Google will have no effect on how OEM's like HTC and Samsung will view Android as a viable platform.
@Poppets

LOL. And what do you suppose HTC, LG , Samsung and others thought, when Microsoft announced their sweetheart deal with Nokia, with Ballmer saying, "Nokia will work with us to push hardware advances."

Come on, Elop is being hypocritical, trying to spread the FUD.
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Doesn't mean he's lying.
William Farrell 18th Aug
@root12
@root12 Mr. Elop is Nokia-man, not Microsoft-man. Please don't perpetuate childish conspiracy theories.
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RE: Nokia CEO sees 'danger ahead' for Android phone makers
obvio.capitao@... Updated - 21st Aug
@jgm@...

If Elop is not a Microsoft-man, why is he trying to atract more phone makers to WP7? To compete against Nokia???

Even if WP7 market share miraculously went from 3% to 30%, it would be best to Nokia to STFU, to avoid more competitors -- after all, they already have Android, but Nokia is totally tied to WP7.

Way to go, Elop! Steve Ballmer must be happy.
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More Wishful thinking?
Dietrich T. Schmitz * Your Linux Advocate Updated - 18th Aug
Based on the open handset alliance endorsements,

h-t-t-p://www.zdnet.com/blog/bott/googles-coalition-speaks-with-one-voice/3771


I'd say that Android phone makers are happy with the status quo--a maximum of autonomy and flexibility comes with Android which sets itself apart from other non-Linux competing vendors.
@Dietrich T. Schmitz * Your Linux Advocate What you say makes no sense. Why don't you elaborate?
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Sure.
Dietrich T. Schmitz * Your Linux Advocate 18th Aug
@General C#

h-t-t-p://www.zdnet.com/blog/bott/googles-coalition-speaks-with-one-voice/3771
@General C# OK I will then elaborate. Android is an Open Source project AKA if the other manufactores don't like the new Motorola and Google merger then can take the code and make a fork AKA a new operating system.

The bonus really is not the open source status. The bonus is now Google just bought a TON of patents and now has a war chest. It's sad and I wish Google just took a stance against this patent mess we have in Tech, but now Google can help defend the platform.

I predict that Google spins off the manufacturing arm of Motorola within a a year or two. So sorry this spin from Pro-Windows Mobile people is exactly what I would say if I were them, but it's not true.

Android took over the world by have a better license and a better open enviroment. The closed eco-system of Apple has always kept it from winning in Tech. They had advantages that no one else ever had and they can never capitalize on it. (iPhone did for a few years and right now iPad but once again Apple will shoot themselves in the foot)
@Dietrich T. Schmitz * Your Linux Advocate

You want to defy common sense???
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Try another riddle.
Dietrich T. Schmitz * Your Linux Advocate 18th Aug
@owlnet
nt
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@Dietrich T. Schmitz * Your Linux Advocate

Didn't Motorola just the other day say they're not opposed to making WP7 models?

That absolutely doesn't sound like the words of someone who is happy with the staus quo and Android in general.
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I don't know what your point is.
Dietrich T. Schmitz * Your Linux Advocate 18th Aug
@William Farrell
All vendors will entertain building product for Microsoft--there's profit in that too.
Only more limitations.
It's obvious what Google's intentions are. The whole patent thing, whilst marginally important, is just a self-publicised smoke screen.

They want to enter the phone manufacturing game. That's obvious.

Android is globally present on the majority of current smartphones, so go figure... wouldn't Google want a piece of the pie?
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@Poppets "They want to enter the phone manufacturing game. That's obvious."

Oh really? They want to be a company with insanely high profit margins and instead become one with insanely low profit margins? From everything you know about Google, does that really sound like a smart move?

Lets assume for a moment you are right, which I do not think you are, but lets pretend. If they wanted to just get into the phone making business they would have been far better off buying HTC. Oh wait, HTC has few patents and would not have helped Google defend Android in court.

Some things to remember. Android is the future of Google because more people are introduced the the internet for the 1st time via a smart phone that by PC. (And other reasons.) Android is the number one smart phone OS on the planet. Android got there because it allowed for much high profit margin for manufactures due to the total lack of licencing. And it is the free nature of Android that is being threatened right now by Microsoft, Apple and others. If Google can not protect the free aspect of Android, the OS will fail.

Make no mistake, this was a defensive more that will allow Android to stay on the offensive. Everything else is just added value. But do not think for a second Google will risk alienating its partners with this purchase. In fact, I would be willing to bet that is push came to shove Google would shut down the smart phone division and use it for prototypes, there-by allowing their partners a larger share of the market.

Google makes money by having Android on smart phones and that is their number one focus in this area.

That being said, I do see them shifting Motorola's focus away from phones and getting heavy into Tablets. I am talking HEAVY into tablets.

Right now none of Google's partners are doing well in the tablet space, in fact, many are cutting back. This would be a place Moto could shine while at the same time allowing Google's partners to have a larger slice of the cell phone market, while at the same time having the patent portfolio to protect them.

Look for a single high end Nexus Tablet to hit the market withing 8 months and expect it to mimic the iPad release cycle and distribution model. That is to say, a single Nexus Tablet with a yearly refresh.
@Poppets Motorola's patents aren't for O/S, they are for H/W. Big difference.
Of course he's going to say that, he chose WP7 over Android and now trying to scare the other OEM's away from WP7.

Is it coincidence that a former MS exec took over the running of Nokia, who are now developing WP7 devices and scrapping their own Symbian & MeeGO OS's in favour of it? and that there are rumours MS will snap up Nokia ?

Got to love conspiracy theories and add fuel to the fire.
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Contributr
@Jayton See, I thought the opposite. I thought he was trying to scare people away from *Android*, into the arms of WP7. Thoughts?
@zwhittaker I see this eventually playing out like the plays for sure thing. Once Microsoft sufficiently wounds Android, then they will go after the OEMs. In the end Microsoft buys Nokia for pennies on the dollar and cuts everyone else out of the loop.
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@Jayton
So I'm not sure how you can say that Nokia scrapped it. They made a business decision based on how porly Symbian was selling.
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Perhaps it's time for Android to be forked. Why would any CEO want to hand the advantage to their competitor in any way, shape or form?
An alternative would be for these guys to begin licensing WebOS.
@General C#
Android has already been forked. The fork is called CyanoGenMod and Samsung just hired the guy who produces it.

From what I've seen of WebOS it's great. Now if only they could license it to someone ...
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Perhaps it's time for Android to be forked. Why would any CEO want to hand the advantage to their competitor in any way, shape or form?
An alternative would be for these guys to begin licensing WebOS.
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Yeah... And???
Corey340 18th Aug
Motorola already had preferential treatment. Did he not notice that the Xoom was first out of the gate? Besides, it's good that Google will be in position to seriously challenge the 'Killer from Cupertino'.

Let's just hope they're ready to level some serious innovation and not just more uninteresting 'me-too' products. A win-win for consumers is a big WIN for the marketplace.
Android is a pirate ship. Like it or not, this ship will be sunk by fair competition law, trade secret law or patents , whatever one would like to call it. Google fanboys, linux fans, android fans, etc will have to accept this reallity eventually.
@owlnet LOL drink more coolaid. You like Patents? You like Trade Secret Law? OK Fair Competition from who? MS LOL or Apple (EU court case anyone). Consumers buy based on a number of things and shiny cool objects is one, but then Apple always charges more then people will pay with less flexibility then people want.

Apple has been a marginal company and will further marginalize themselves. I have seen that since the 1970s they have always shot themselves in the foot. They lie, mislead and just stupidly enforce stupid philosophy on its users. Your welcome to buy and use Apple for the rest of your life, but the golden age of Apple (iPod to iPad) is over.

Linux is 20 years old and it keeps growing. Linux is now the number one operating system in mobile (Android and WebOS) so ok I guess we are sinking.
I am shocked and stunned at his comments... who woulda thought???
@rikasa

Seriously, he didn't really need to state the obvious.

All but the most rabid Google fanbois can see the writing on the wall: the rest of the Android OEM's are now rethinking their strategy with Android.

Elop was just doing his part to promote Windows Phone - what's wrong with that? Essentially what he said is true.
@Poppets
what's wrong with that? Well; this:

http://www.eurodroid.com/2011/08/15/samsung-htc-lg-and-sony-ericsson-all-very-happy-for-google-and-motorola/ [source: http://www.eurodroid.com/]

Research both sides before jumping on Elop's show pony.
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RE: Nokia CEO sees 'danger ahead' for Android phone makers
obvio.capitao@... Updated - 19th Aug
I'll tell you what's wrong.

Elop said he would choose WP7 instead of Android because he didn't want Nokia to become a "me too" company. He wanted to have something unique.

That argument never convinced me, for a simple fact: Microsoft doesn't allow phone makers to change the interface; Android, on the other hand, allow customization -- just compare HTC and Samsung phones.

If WP7 becomes a success, used by many phone makers, Nokia will become a "me too" company.

But, fast-forward 6 months, and Elop is trying to bring more phone makers to the WP7 camp.

WTF? It doesn't make sense.

If he wanted a "ecosystem" with many phone developers, why didn't he pick Android? Why did he pick the only operating system without ecosystem?

Because he works for Microsoft, that is. Stephen Elop is a trojan horse from Microsoft.

If WP7 is a failure, Nokia looses. If WP7 is a hit, and more companies adopt it, Nokia will become a "me too" company -- not the intended plan.


Just think about it: suppose Samsung and HTC listen to Elop and WP7 is wildly successful, grabing 30% of market share. This would be a huge success, right? Wrong: the market share would be split with two other companies -- 10% for each one. But Samsung and HTC also produce Android phones, so they have bigger scales


In other words: even if WP7 becomes a hit beyond Ballmer's wildest dreams, Nokia won't have more than 10% of market share.


That's because Microsoft needed Nokia desesperately; Nokia never needed Microsoft. It was a bad move, conducted by a Microsoft man, to save WP7.
@obvio.capitao@...

and that too!!!! happy
Well the best option is for Nokia to pick back up MeeGo and co develop it with Samsung to LG and HTC, also consider HP WebOS as a partner and combine the two OS's
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No "danger" of that ...
Still Lynn 9th Sep
@grimesdr
Nokia is only discontinuing Meego in the US for now. Strangely enough they will keep distributing it in the smaller markets. Hmmmmm ...

Samsung is looking to enhance their own Bada (Wave) OS and expand its share. On top of that they just hired the programmer behind CyanoGenMod which is a fork of Android. They can't combine WebOS with anything else without HP's permission because HP doesn't intend to sell WebOS, they want to license it to handset makers.
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Elop is the prefect slave
carlo.xavier.lopez 18th Aug
After Microsoft bought Nokia they weren't saying that...
I get the feeling that Microsoft is very upset with this move.
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RE: Nokia CEO sees 'danger ahead' for Android phone makers
obvio.capitao@... Updated - 19th Aug
Wait a moment.

Why would Nokia's CEO alert other phone makers about the "danger ahead"? Is he trying to help them??

Perhaps he wants more companies to adopt Windows Phone 7, so his company can have... more competition???

Isn't Nokia situation bad enough?
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Wow!! What a shocker!!
iTeaBoy 18th Aug
Ex MS exec, now Nokia exec spreading FUD about Google/Motorola and Android.

Let's see now....

MS losing out to Google (mobile/search etc)
Nokia's symbia losing out to Android
Nokia losing out to Motorola (and other Android manufacturers)

Do we really expect him to say anything positive about 2 of his biggest competitors getting together.

It's funny how he can see the down side for other 3rd party Android manufacturers from the Goolge/Motorola deal... but hasn't said anything of the impact for 3rd Party WP7 manufacturers from the MS/Nokia deal. I know it's not quite the same, but exactly how close is this MS/Nokia pact anyway?
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Uneven perspective...
MediaCastleX 18th Aug
"...many manufacturers split their time fairly between providing both Android and Windows Phone 7 to their consumers."
Really? The way I see it, for every Windows Phone there are five to ten Android handsets from each of these manufacturers...and THEY get more shelf space, face-time and deals from carriers for consumers. I could only WISH they were being equal in their offerings. (CHEAPSKATES! don't wanna pay for a lousy licensing fee? *sheesh*) >=^|
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RE: Nokia CEO sees 'danger ahead' for Android phone makers
Return_of_the_jedi Updated - 18th Aug
If he really thought that, he would have kept his mouth shut to his advantage.
Wow that is amazing: A Microsoft employee thinks there are issues with a competing product? My next guess is he will say that the sun will rise in the morning.
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Elop Is scared ! ! !
rahulfulzele 18th Aug
Elop claims Google will alienate its Android Parters is highly debatable, but if Elop claims that these partners will abandon Android and go to MS Phone 7 then this is ridiculous conclusion, Microsoft already has special Arrangement with Nokia and there is no guarantee that Micorsoft wont give preferential treatment to Nokia that if Android partners such as HTC (which already selliing win 7 phone) and samsung/LG goes Windows Phone. Elop is truely a troubled man...
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RE: Nokia CEO sees 'danger ahead' for Android phone makers
obvio.capitao@... Updated - 19th Aug
@rahulfulzele "Elop claims Google will alienate its Android Parters is highly debatable, but if Elop claims that these partners will abandon Android and go to MS Phone 7 then this is ridiculous conclusion"

Not only a ridiculous conclusion, but something that he should want to avoid.

Think about that: if WP7 becomes a huge success and grabs 30% of the market, the last thing a Nokia CEO would want would be to split this market with two or three other companies...

If this small market is split evenly (10% Nokia 10% Samsung 10% HTC), Nokia will not have alternatives in the Android market because of Elop dumb decision to make an exclusive deal with Microsoft.
"If Google does decide to give the special treatment to its new acquisition, pushing Android away from existing non-Google manufacturers, one can only presume that existing dual Android and Windows Phone 7 providers will sway towards the latter, and away from Android."
Do you mean like the "Special Treatment" that Microsoft is supposedly giving to Nokia ? Not sure that the statement above it credible.
I think the better Phone/OS/Applications/UI/Cost phone combination will win out in all areas other that iPhones ( where people want decisions made for them).
If Android has it, then they will continue their success. If Apple, Microsoft, Blackberry, etc... manage to have the best, they will succeed.
Patents and price points:

Googles need for Moto is based on these two current and future issues. Patents are current and ongoing, while the pricepoint issue will layout over the long-run.

MS and Apple are beginning there usualy dance of premeum vs bulk, as far as products are concerned. Where apple sells a luxury item, and MS sells to the masses. MS' fwb arrangement with Nokia gives it the mass production power to dive very low in the price point space, and a brand that can sell into the luxury segment. Google has establish this luxury and price posture to keep what it has gained so far. The last 2 years have shown how fast things change, and Nokia selling 1cent MS phones is more dangerous to google than its partners being upset. Google is concerned with Patents and volume. The partners may come and go, but the usual MS vs apple fight has a history of eating third party vendors, and rival OS's. In the long-run Google needs staying power or volume.
@mmerchan
If by "staying power" you mean innovation, I agree. Google innovated their way into the phone and tablet markets. That MUSt continue to offer new features & services from their OS and web environment. The problem is they have stated they want to scale back (Android Labs is an example). They MUST be careful not to quit innovating, something that Microsoft and Apple periodically have forgotten over the long number of years they have been battling.
The only place Windows Phone 7 has "a 9 percent share" is on Fantasy Island. WP7 has 2 percent share.
I don't get what Elop is thinking. Even if WP7 gains share at Android's expense, that's a win for Microsoft, not for Nokia. Elop is CEO of Nokia, not Microsoft. What is going on??? Why isn't Elop working for Nokia???
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RE: Nokia CEO sees 'danger ahead' for Android phone makers
obvio.capitao@... Updated - 19th Aug
@Wombatmobile

That's right!

Nokia gave exclusivity to Microsoft, but Microsoft didn't give exclusivity to Nokia.

If WP7 becomes a hit and grabs 30% of the smartphone market in two or three years, the last thing Elop should ask for would be more competitors in the WP7 market.

Elop is definitely working for Microsoft.
Nokia should make WIndows 8 tablet?
Or Microsoft buys HP and Creates their own Pcs, tablets and smartphones almost like Apple.
@root12
Agreed, his livelihood is tied directly to Nokia's sinking ship and W7M stagnating OS making head way while coming late to the party. This is an up hill fight for them so any FUD about Android or iOS he can facilitate comes with an agenda. He may have a value point or two but he is undoubtedly spread worst case seniors. We will have to see how this pans out.

The other funny thing is were are these phone makers to go...W7M? They would be in the same position but with MS and Nokia in the starring roles.

He also misrepresented W7M market share, it is 1% not 9%. The 9% is for the old Windows mobile OS which are units just waiting to die and move on to a new OS with a high probability it will be something other then W7M.

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