Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

Summary: With the Nokia partnership, Microsoft CEO Steve Ballmer just bought mobile distribution. What Yahoo is to Bing, Nokia is to Windows Phone 7.

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Nokia outlined its highly anticipated strategic overhaul, including a decision to use Microsoft's Windows Phone 7 as its primary platform. The importance of this deal can't be understated for Microsoft. Nokia's distribution will make Windows Phone 7 a top 3 platform.

Simply put, Microsoft just bought itself global distribution with Nokia. It remains to be seen how this strategy works out for Nokia---an effort to launch Android and Windows Phone 7 devices may have been better---but it's a clear win for Microsoft (even though the deal is non-exclusive). The software giant just ensured that it will be a major mobile player.

Adrian Kingsley-Hughes, Sam Diaz Zack Whittaker have the initial coverage live and ZDNet UK's David Meyer is on scene at Nokia's analyst powwow. The big question: Can two hobbled mobile companies can come together to become major players? Adrian sums up the question everyone will have on Friday.

Why no Android? Why not do what HTC has done (successfully) and spread its bets?

More: Nokia statement, Microsoft statement and open letter

The inability of Nokia to spread its bets---it was too complicated---means Microsoft is a guaranteed mobile giant. The deal will work out for Microsoft for sure. Why? Microsoft CEO Steve Ballmer just bought mobile distribution. What Yahoo is to Bing, Nokia is to Windows Phone 7.

"The game has changed from a war of devices to a war of ecosystems," said Nokia CEO Stephen Elop at his press conference. "We have an opportunity to disrupt the trajectory in the mobile ecosystem. Together we will deliver great mobile products."

Ballmer said Microsoft and Nokia "can work together in a different kind of a way." Nokia and Microsoft engineers will collaborate. Nokia will bring its hardware expertise to the partnership and help develop Windows Phone 7. Both Ballmer and Elop noted that the partnership will yield some enterprise friendly developments.

At the press conference, Elop outlined how the Microsoft partnership is good for Nokia. Then Elop delivered the understatement of 2011.

"We believe this partnership is also good for Microsoft."

Gee, ya think Stephen? The mobile standings via Gartner tell the tale:

Let's assume that over the next three years Nokia's Symbian operating system largely gets replaced by Windows Phone 7. If that's the case, Microsoft garners about 30 percent market share. I'm going to assume some market share leakage. At the very least, Microsoft winds up with 20 percent market share. Add it up and Microsoft just ensured there's a four-horse mobile OS race short term: Android, Apple's iOS, RIM and Windows Phone 7. If you assume RIM winds up with Android somehow, then it's a three-horse race. Elop said "this is now a three horse race."

If Android won over Nokia it would have been game, set, match for the mobile platform race. Google would have won.

Nokia shipped more than 461 mobile units in 2010. No one even comes close to that many devices. Microsoft will ride along with most of those devices.

In a nutshell, Nokia will:

  • Focus on Windows Phone and Microsoft's ecosystem---Bings, Xbox Live and Office.
  • MeeGo will ship, but largely be a learning experience for Nokia.
  • Install a new leadership team.
  • Structure the company to focus on smart devices and mobile phones---a move that makes a lot of sense.

Elop said Nokia and Microsoft have been on a journey on the mobile front. A few specifics are yet to be determined, but Ballmer and Elop have promised to disrupt, overcome challenges and be speedy.

Ballmer has taken a lot of heat for missing the mobile curve. Today, Microsoft got itself back in the game with this Nokia partnership.

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

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  • Suicide Pact

    This is going to fail.<br><br>There's no guarantee of Microsoft success. The public has so far rejected Windows Phone 7. People simply don't want a Microsoft OS. Making more handsets is not going to matter. LG got burned. Watch the other WP7 OEMs drop off.
    Vbitrate
    • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

      @zndac That's not true. Sales were pretty good for such a market, saturated with options that are very much ahead of the WP7 platform. I think it will only grow stronger. Bullish.
      nicholas22
      • Nokia signed its death sentence

        MS OS is not mature enough. though it doesn't mean it wont compete. Though 15 dollars MS toll on all Nokia phones will guarantee it will lose its worldwide dominance.

        This pact only saves Steve Balmer from getting fired.

        I do appreciate competition, and its good (even if Apple only has 15% of the market) it keeps the big dog honest.

        A smarter move would have been to team up with HP and deliver an awesome product.

        Windows 7 now has a leg to stand on. Does it have the backbone to keep on standing, that remains to be seen. Sales of the initial devices didn't show this to be the case. But Nokia is an entirely new process.
        Uralbas
      • delusional

        @nicholas22
        wp7 sold even less than the decade old winmo 6.x in the last quarter. being bullish on something though all indications go against it, is well ... delusional.

        beyond that: The change Apple has wrought is a wonder to behold. And, so it goes: Nokia gives up, sells soul to Microsoft, becomes just another phone assembler, but at least their OS of choice isn?t riddled with Apple?s IP. Next domino: RIM.
        banned from zdnet
      • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

        @uralbas, banned from zdnet
        Come on Guys, the OS is not even 100 days old and you are blowing horns. Sorry it seems this news hurt your feelings.
        Ram U
      • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

        @nicholas22 I've yet to see a single WP7 in the wild... I look around at these things (when I'm commuting on the train, when I'm walking around) as a rough measure of acceptance. Then again, that isn't an official study, or even scientific... Just saying, based on my own observations I haven't seen any of them in the wild.
        snoop0x7b
      • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

        @snoop0x7b
        How do you know that you've never seen a WP7 in the wild? The hardware for most of them is the same as a number of Android phones. Unless you could see the home screens of each and every phone you "observed", you really have no idea whether or not you've seen a WP7 in the wild.
        Nunya Bidnez
      • 2 losers do not equal a winner....

        I think you all missed the short bus.... This changes nothing... MS has one more hardware maker. Nokia will put a crap OS on its hardware... What you fail to see is that Nokia specializes in cheap phones. A WP7 phone is not going to be a cheap phone and still has to compete with iPhone and all the iPhone wannabes. <br><br>It doesn't change anything... iPhone and Roid will continue to battle. Roid will continue its path to being the most malware infested, non updateable, most fragmented, most frustrating device in history. When Roid reaches critical mass, people will dump it like yesterdays coffee. But before that happens, Rim and Palm will die and slowly fade into history... WP7 will gain some share when Roid dies, but that will just be the anti Apple tards. iPhone will still emerge victorious and await a challenge from someone with some real innovation (not immitation) to offer. but that will be 8 or 9 years down the road. In the mean time, I still think that some people who will want a cheap dumb phone. So Nokia might still be around when that happens.
        i8thecat
      • How much market share do you predict Apple having then?

        @nicholas22

        I don't completely disagree with you on Android. I think you're overstating it, but the problem is there and it is creating some negative word of mouth. I've heard numerous people complain about their Android phone, but I've heard more who like it just fine. It's say it's about a 60/40 mix, completely in my own experience. It's low enough that we've stopped recommending them to customers to sync with Exchange unless they purchase the Nitro Exchange app.

        I think the iPhone is pretty good but I don't think it's going to be a 90% of the market kind of device. I see it being around and a big player for a long time though. I also think WP7 is on the right track as the best alternative, I certainly wouldn't classify it as a "crap OS". I've got about a dozen clients who have purchased them and only one has any complaints and he went with the LG. So I'm not terribly surprised. Everyone else has a HTC or Samsung.

        Microsoft seems to be striving for the middle ground between Android and iOS. We'll see if Nokia can help. As I've seen stated numerous times and I agree with, WP7's biggest problem is simply all the hardware is mediocre. Of course that allowed them to sell them cheaper, hence the deals you can get, because it was exactly cutting edge hardware. There needs to be a flagship device for WP7. I certainly hope Microsoft isn't waiting for Nokia to build it at the end of the year. I would have been trying to get HTC to build a Thunderbolt with WP7 on it.
        LiquidLearner
      • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

        @Uralbas - Really? You would NOT buy the $200 smartphone you wanted because of a $15 charge for the operating system?? And my guess is that, with the magnitude of the deal, they got a significant discount on that cost. I also think that it is likely that sales numbers will change when the CDMA phones hit and the marketing can start being made across all platforms. MS hasn't even revved up its advertising. I don't think this chapter has much written beyond word one.
        always-a-geek
    • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

      @zndac
      Waiting for Verizon and I am in. I plan to use my Incredible and WinPhone7 in a swap out scenario and then I will get back to you once I have tested them in real world. Have you used one before or are you just out here blowin your horn?
      OhTheHumanity
    • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

      @zndac calm down guys. All you have to do is to accept the fact. Competition is good for us, isn't it?
      UseYourHead
    • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

      @zndac <br><br>Au contraire. This means that WP7 is a guaranteed success. There will be apps. An ecosystem, etc. It took Android like a year to get a second phone, let alone multiple phone makers. Windows already has four handset partners and just landed the belle of the ball.<br><br>It is not impossible to imagine WP7 at number one in two years time.<br><br>I am a webOS user. After the debacle that was Wednesday's press conference, that platform is now clearly dead. So, while I love it, it is time to look elsewhere. As a consumer who is fervently anti-Apple and anti-Google, there aren't many good choices...well, *yesterday* there weren't. Today, WP7 looks like a safe bet. I'll be jumping on this weekend, I hope.
      x I'm tc
      • A distribution channel does not guarantee success.

        @jdakula
        Ford had a great auto distribution channel in the late 1950s and it didn't help Edsel sales. Microsoft had a great software distribution channel in the mid 1990s and it didn't help Bob. Having a solid distribution channel only guarantees that you CAN be competitive, not that you WILL be a success. Maybe it's time for you to consider a college education...at least a basic business course.
        jasonp9
      • So why anti Apple and anti Google yet pro MS?

        @jdakula
        If Apple or Google have offended you with their actions and tactics you do realize there is no sin against you that either company has done that MS had not done first right?

        Pagan jim
        James Quinn
      • My question also

        @James Quinn

        MS was a "scumbag" long before Apple and Google became powerful and at times ruthless. I do not trust ANY mega corporation, but I prefer "open" over "closed". It allows me to retain greater control, which is important to me.

        Anybody who is a fanboy of any of those 3 entities has a screw loose, IMHO. They do not give a rats a$$ about you beyond keeping their hand in your pocket for financial gain. Too many consumers are mindless sheep, somehow aligning their self image and self worth with corporate images and products.
        Economister
      • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

        @jdakula It sounds like the only reason you are in favor of WP7 is because you are so against Apple and Google, not because WP7 is actually great. Doesn't say much for the future of an OS that is chosen not on its merits, but on the dislike of others.
        dabble53
      • jasonp: It's clear that the one needing to go back to school is you

        because, in the business world, one failure, or even a few, does not equal a total failure.

        Bob, may not have been a success for Microsoft, but, they learned from their mistake, and the Windows franchise is alive and well and better than ever. Likewise with most other projects undertaken by Microsoft. Ford was a success also, even with some failures along the way.

        BTW, wasn't Apple almost counted out of the tech market a bit over 10 years ago with their "failures" and haven't they come back, big time?

        With a company the size of Microsoft, a few failures along the way won't break the company, and the XBox is a prime example of stick-with-it decisions which create successes. Knee-jerk reactions to one or more failures does not make for great or good management.
        adornoe
      • RE: Nokia to rely on Microsoft's Windows Phone 7: 'This is now a three horse race'

        @jdakula

        All I can say is ROFLMAO. You play the stock market?
        timspublic1
      • Reading comprehension problems?

        @adornoe
        Nowhere in my post did I say that WP7 would be a total failure. What I said, had you actually tried reading for comprehension, was that a distribution channel doesn't guarantee success. I stand by that statement. Now go back to school and learn how to understand written English.
        jasonp9